2021 Annual Report
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
LETTER TO THE SHAREHOLDERS
MANAGEMENT’S DISCUSSION AND ANALYSIS
PERFORMANCE HIGHLIGHTS
ABOUT DENISON
URANIUM INDUSTRY OVERVIEW
RESULTS OF OPERATIONS
OUTLOOK FOR 2022
ADDITIONAL INFORMATION
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
RESPONSIBILITY FOR FINANCIAL STATEMENTS
INDEPENDENT AUDITORS REPORT
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
2
3
3
4
5
8
35
37
52
55
56
60
LETTER TO THE SHAREHOLDERS
A Year of Strong Operational and Financial Results Backed by an Improving
Uranium Market and Significant Gains on Physical Uranium Holdings
March 23, 2022
Dear Shareholders,
Our results from 2021 reflect a significant improvement in the uranium market, as well as continued operational
progress advancing Wheeler River’s Phoenix uranium deposit (‘Phoenix’) towards a development decision.
A year ago, Denison completed a novel project financing initiative in support of the future development of the Wheeler
River project, involving the purchase of 2.5 million pounds U3O8 in physical uranium holdings at an average cost of
US$29.66/lb U3O8. The financing was designed to position our shareholders to benefit from the additional financial
stability of our uranium holdings, while remaining fully leveraged to any future appreciation of uranium prices that might
occur prior to the completion of a project financing for Wheeler River. Since then, the uranium spot market has improved
considerably, with continued support from financial investors, leading to a significant increase in the spot price in 2021
and a $41.4 million gain on Denison’s physical uranium holdings.
The improvement in the spot price was not only positive for Denison’s balance sheet, but it also appears to have
catalyzed further fundamental developments in the long-term supply market. We have seen nuclear utilities seek to
address significant future uncovered requirements in an environment with reduced visibility to available sources of
supply – leading to increased long-term contracting activity and prices. Combined with positive demand signals coming
from a growing chorus of support for the critical role nuclear must play in the clean energy transition, the narrative for
the development of new top tier new uranium mining projects has become quite positive.
Now several years into Denison’s long-term plan for the advancement of Wheeler River, our Company is uniquely
aligned with the improving uranium market, as we continue to successfully demonstrate the potential for the Phoenix
deposit to emerge as the first In-Situ Recovery (‘ISR’) uranium mine in the Athabasca Basin region. Our de-risking
efforts at Phoenix have involved extensive field and laboratory testing since completion of the Pre-Feasibility Study in
2018, which to date culminated in the completion of the installation and field testing of a 5-spot commercial-scale ISR
test pattern in 2021. The field test was highly successful and confirmed key technical assumptions made in the PFS.
Taken together with our positive metallurgical results, our work in 2021 has demonstrated tangible support for our
selection of the ISR mining method for Phoenix and our decision to initiate a formal Feasibility Study.
Our plans for 2022 are ambitious – with a primary focus on driving towards the completion of key technical and
regulatory milestones for Wheeler River, while also supporting a secondary focus of unlocking value from Denison’s
vast project portfolio, including continued exploration amongst our many highly-prospective property interests, and the
initial evaluation of potential development plans for both the Midwest and McClean Lake projects.
As we advance towards our goal of positioning Denison as a high leverage uranium development company, poised to
become Canada’s next uranium producer, the Board of Directors and the management team thank you for your
continued support of, and interest in, Denison.
Best Regards,
/s/ “David D. Cates”
David Cates
Director, President & CEO
2
MANAGEMENT’S DISCUSSION & ANALYSIS
This Management’s Discussion and Analysis (‘MD&A’) of Denison Mines Corp. and its subsidiary companies, joint
arrangements, and contractual obligations (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 3, 2022 and should be read in conjunction with the Company’s audited consolidated financial statements and
related notes for the year ended December 31, 2021. 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 in this MD&A are expressed in Canadian dollars, unless otherwise noted.
Additional information about Denison, including the Company’s press releases, quarterly and annual reports, Annual
Information Form and Form 40-F is available through the Company’s filings with the securities regulatory authorities in
Canada at www.sedar.com (‘SEDAR’) and the United States at www.sec.gov/edgar.shtml (‘EDGAR’).
2021 PERFORMANCE HIGHLIGHTS
Completed highly successful In-Situ Recovery (‘ISR’) Field Tests at Phoenix, resulting in significant de-
risking and supporting the decision to advance to a formal Feasibility Study (‘FS’)
The Company continued its systematic approach to de-risking the technical risks identified for the ISR mining
operation for the Phoenix uranium deposit (‘Phoenix’) at the Wheeler River Uranium Project (‘Wheeler River’ or the
‘Project’), following completion of the 2018 Pre-Feasibility Study (‘PFS’). Notably, in 2021 the Company completed
a highly successful ISR field test program including the installation and testing of a pattern of five commercial scale
wells (‘CSWs’). The results from the field test were highlighted by the following:
Achieved commercial-scale production flow rates consistent with those assumed in the PFS;
Demonstrated hydraulic control of injected solution during an ion tracer test;
Established breakthrough times between injection and recovery wells consistent with previously prepared
estimates; and
Demonstrated the ability to remediate the five-spot CSW test pattern (‘Test Pattern’).
Additionally, positive results from ongoing metallurgical test work supported the decision to increase the anticipated
ISR mining head-grade for Phoenix by 50%.
Given consistently positive results from field testing and laboratory testing, Denison and the Wheeler River Joint
Venture (‘WRJV’) approved the initiation of the formal FS report process for the Phoenix ISR project, and appointed
Wood PLC (‘Wood’) as independent lead author of the FS.
Secured funding to complete the Environmental Assessment (‘EA’) and FS process for Wheeler River
Denison completed a series of equity financings during 2021 intending to fund the EA and FS processes for Wheeler
River. These financings raised gross proceeds of $48.2 million (including $11.9 million from At-the-Market (‘ATM’)
offerings) from the issuance of 39.7 million common shares and 15.8 million common share purchase warrants.
Based on current estimates, the net proceeds from these financings are expected to be sufficient to fund the
completion of the FS and EA processes for Wheeler River.
Executed a Wheeler River project financing initiative involving the strategic acquisition of physical uranium
and recorded significant uranium investment gains
In March 2021, Denison successfully completed a public offering of units for gross proceeds of $107.9 million. The
majority of the net proceeds of the offering were used to fund the strategic purchase of 2.5 million pounds of uranium
concentrates (‘U3O8’) at a weighted average price of US$29.66 per pound U3O8. The uranium is being held by Denison
as a long-term investment, which is intended to support the potential future financing of the advancement and/or
construction of Wheeler River.
The uranium spot price appreciated to US$42.00 per pound U3O8 by December 31, 2021, resulting in a fair value
gain on the Company’s physical uranium holdings of $41,440,000 for the year ended December 31, 2021.
Obtained funding for high-potential exploration programs in 2021 and 2022
The Company raised gross proceeds of $8.0 million in March 2021, from the issuance of common shares on a flow-
through basis, to fund eligible Canadian exploration activities in 2021 and 2022.
3
MANAGEMENT’S DISCUSSION & ANALYSIS
Acquired 50% of JCU (Canada) Exploration Company, Limited (‘JCU’) for $20.5 million
In August 2021, Denison completed the acquisition of 50% of JCU from UEX Corporation (‘UEX’) for cash
consideration of $20.5 million following UEX’s acquisition of 100% of JCU from Overseas Uranium Resources
Development Co., Ltd. (‘OURD’) for $41 million. JCU holds a portfolio of 12 uranium project joint venture interests in
Canada, including a 10% interest in Wheeler River, a 30.099% interest in the Millennium project (Cameco
Corporation, 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada Inc. (‘Orano Canada’),
66.1877%), and a 34.4508% interest in the Christie Lake project (UEX, 65.5492%).
Advanced actions to support reconciliation with Indigenous peoples
Denison formally adopted an Indigenous People’s Policy (‘IPP’) in 2021, which reflects the Company’s recognition
of the important role of Canadian business in the process of reconciliation with Indigenous peoples in Canada and
outlines the Company’s commitment to take action towards advancing reconciliation.
Also in 2021, the Company entered into a Participation and Funding Agreement and Letter of Intent with the English
River First Nation (‘ERFN’) in connection with the advancement of the proposed ISR operation at Wheeler River, as
well as an Exploration Agreement in respect of Denison’s exploration and evaluation activities within the ERFN
traditional territories. These agreements reflect Denison’s desire to operate its business in a progressive and
sustainable manner that respects ERFN rights and advances reconciliation with Indigenous peoples. The
agreements provide ERFN with economic opportunities and other benefits, and establish a foundation for future
collaboration in an authentic, cooperative, and respectful way.
Discovery of high-grade uranium outside of the Phoenix Zone A high-grade domain
Drill hole GWR-045, completed as part of the ISR field test program as a monitoring well (‘MW’) to the northwest of
the CSW Test Pattern, was, based on the mineral resources currently estimated for Phoenix, expected to intersect
low grade uranium mineralization on the northwest margin of the deposit. The drill hole, however, intersected a thick
interval of high-grade unconformity-associated uranium mineralization grading 22.0% eU3O8 over 8.6 metres. Follow
up drilling returned multiple additional intersections of high-grade uranium mineralization, including 24.9% eU3O8
over 4.2 metres in drill hole GWR-049. Taken together, these results are expected to expand the volume of the high-
grade domain to the northwest in the Phase 1 area of Phoenix Zone A.
Sold shares and warrants in GoviEx Uranium Limited (‘GoviEx’) for proceeds of up to $41.6 million
In October 2021, the Company sold 32,500,000 common shares of GoviEx, previously held by Denison for investment
purposes, and 32,500,000 common share purchase warrants, entitling the holder to acquire one additional common
share of GoviEx owned by Denison at an exercise price of $0.80 for a term of up to 18 months (the ‘GoviEx Warrants’).
Denison received gross proceeds of $15,600,000 on the sale of the shares and warrants and continues to hold
32,644,000 common shares of GoviEx. If the GoviEx Warrants are exercised in full, Denison will receive further gross
proceeds of $26,000,000 and will transfer a further 32,500,000 GoviEx common shares to the warrant holders.
Received $5.8 million in connection with the conversion of Uranium Participation Corporation (‘UPC’) into
the Sprott Physical Uranium Trust
In April 2021, UPC announced that it had reached an agreement with Sprott Asset Management LP (‘Sprott’) for the
Sprott Physical Uranium Trust to acquire UPC (the ‘UPC Transaction’). Upon completion of the UPC Transaction on
July 19, 2021, Sprott became the manager of the Sprott Physical Uranium Trust, and the management services
agreement (‘MSA’) between Denison and UPC was terminated. In accordance with the terms of the MSA, Denison
received a cash payment of approximately $5.8 million in connection with the termination.
ABOUT DENISON
Denison Mines Corp. was formed under the laws of Ontario and is a reporting issuer in all Canadian provinces and
territories. Denison’s common shares are listed on the Toronto Stock Exchange (the ‘TSX’) under the symbol ‘DML’
and on the NYSE American exchange under the symbol ‘DNN’.
4
MANAGEMENT’S DISCUSSION & ANALYSIS
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of
northern Saskatchewan, Canada. The Company has an effective 95% interest in its flagship Wheeler River Uranium
Project, which is the largest undeveloped uranium project in the infrastructure rich eastern portion of the Athabasca
Basin region of northern Saskatchewan. A PFS was completed for Wheeler River in late 2018, considering the potential
economic merit of developing Phoenix as an ISR operation and the Gryphon deposit as a conventional underground
mining operation. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake
Joint Venture (‘MLJV’), which includes several uranium deposits and the McClean Lake uranium mill, which is
contracted to process the ore from the Cigar Lake mine under a toll milling agreement (see RESULTS OF
OPERATIONS below for more details), plus a 25.17% interest in the Midwest Main and Midwest A deposits and a
66.90% interest in the Tthe Heldeth Túé (‘THT,’ formerly J Zone) and Huskie deposits on the Waterbury Lake property.
The Midwest Main, Midwest A, THT and Huskie deposits are located within 20 kilometres of the McClean Lake mill.
Through its 50% ownership of JCU, Denison holds additional interests in various uranium project joint ventures in
Canada, including the Millennium project (JCU, 30.099%), the Kiggavik project (JCU, 33.8123%) and Christie Lake
(JCU, 34.4508%).
Denison’s exploration portfolio includes further interests in properties covering approximately 297,000 hectares in the
Athabasca Basin region.
Denison is also engaged in mine decommissioning and environmental services through its Closed Mines group, which
manages Denison’s Elliot Lake reclamation projects and provides third-party post-closure mine care and maintenance
services.
Prior to July 19, 2021, Denison also served as the manager of UPC, a publicly traded company listed on the TSX that
invested in U3O8 and uranium hexafluoride (‘UF6’). In April 2021, UPC announced that it had entered into an agreement
with Sprott to convert UPC into the Sprott Physical Uranium Trust. This transaction closed on July 19, 2021, and the
MSA between Denison and UPC was terminated.
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. The Company has built a portfolio of strategic
uranium deposits, properties, and investments – highlighted by an effective 95% interest in Wheeler River and a
minority interest in the MLJV, which owns an operating and licensed uranium milling, 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 Wheeler River 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 offers shareholders exposure to value creation through the potential future development of
Wheeler River and advancement of the Company’s other potential development projects. Additionally, Denison’s
exploration and development portfolio, and substantial physical holdings of uranium, provides investors with meaningful
leverage to an anticipated increase in future uranium prices.
URANIUM INDUSTRY OVERVIEW
The year ended December 31, 2021, saw significant upward momentum in both the uranium spot price and term price.
In the spot market, the price of uranium started the year at US$30,00 per pound U3O8, and increased to a high of
US$50.25 per pound U3O8 in September 2021, before declining modestly to end the year at US$42.00 per pound U3O8
– a 40% increase year over year. A similar price increase was observed in the long-term market, with the long-term
price increasing from US$33.00 per pound U3O8 at December 31, 2020 to a high of US$41.00 per pound U3O8, and
ending the year at US$40.50 per pound U3O8. This US$7.50 per pound U3O8 increase in the long-term price is the
largest annual gain since 2007.
During 2021, there was a widespread increase in investor interest in the uranium and nuclear energy sectors, which is
believed to have largely been driven by a renewed focus on global goals to achieve net-zero carbon emissions, and
the necessary role for nuclear energy in a post-COVID-19 pandemic “clean energy transition”. In assessing the
potential paths to reduce carbon emissions many nations, policymakers, and interest groups have recognized the
critical role that their existing or planned future nuclear power plants, must play to achieve decarbonization objectives.
5
MANAGEMENT’S DISCUSSION & ANALYSIS
The focus on the importance of nuclear power in enabling the achievement of carbon emissions goals is global. In its
14th Five Year Plan, China included the goal to increase nuclear capacity to 70 GWe by 2025, an expansion of 40%
from its current installed capacity at the end of 2021 of approximately 50 Gwe. In Europe, the European Commission
announced the inclusion of nuclear power in its clean energy financing taxonomy, which establishes the criteria for
‘green’ economic activities that can access favourable financing. In the US, the Infrastructure, Investment, and Jobs
Act established a US$1.2 billion / year civil nuclear credit program designed to preserve the US’s existing nuclear fleet
by supporting economically troubled nuclear plants and preventing premature plant shutdowns. In addition, many other
countries are also developing plans to expand nuclear capacity, including the UK, France, Japan, the Netherlands,
Poland, and Brazil. Taken together, forecasted estimates from UxC LLC (‘UxC’) for global reactor units and nuclear
capacity in 2035 have increased substantially in the current year from 460 units and 448.5 MWe installed capacity
(estimated as of Q4’2020) to 512 units and 488.6 Mwe installed capacity (estimated as of Q4’2021). As a result, UxC’s
base case estimate of global uranium demand in 2035 has increased 10% - from 209 million pounds U3O8 (estimated
as of Q4’2020) to the current estimate of 229 million pounds U3O8 (estimated as of Q4’2021).
The positive investor sentiment that defined 2021 led to a large increase in uranium spot market activity from secondary
sources, including uranium exploration and development companies (including Denison), uranium producers, and
investment entities. Estimates suggest that approximately 53 million pounds U3O8 was acquired by secondary sources
in 2021. This strong purchasing from secondary sources resulted in overall spot market activity reaching a record high
of 102 million pounds U3O8 in 2021, an increase of 8% from the previous record of 94 million pounds U3O8 set in 2020.
On the supply side, uranium production for 2021 is estimated at 124 million pounds U3O8, which represents a 13%
reduction from 2019 production levels in part due to production disruptions connected to the COVID-19 pandemic. Total
demand for 2021 is estimated at 213 million pounds U3O8, resulting in a significant primary supply shortfall of 89 million
pounds U3O8. UxC estimates that this shortfall was fully met by approximately 89 pounds U3O8 that entered the market
from secondary supplies.
While primary production is estimated to increase in 2022 (including the announced restart of the McArthur River mine),
a significant primary supply deficit is still expected to exist in contrast to base case demand estimated at 200 million
pounds U3O8. Similar to 2021, it is expected that the excess of demand over primary production in 2022 will again be
supplied by secondary sources (including commercial inventories, reprocessing of spent fuel, sales by uranium
enrichers, and inventories held by governments). These secondary sources of supply, however, are expected to fall
significantly over the next five to seven years, and the pandemic-related production curtailments in 2020 and 2021
accelerated this process, resulting in the drawdown of approximately 55 million more pounds U3O8 of secondary
supplies during 2020 and 2021 than previously estimated by UxC.
While the restart of idled or curtailed production from existing uranium mining operations are expected to provide the
support necessary to balance supply deficits through 2025, the accelerated decline in secondary sources of supply in
recent years, the depletion of existing mines, and growing future demand, point to larger supply deficits during the
second half of the decade that will be difficult balance without considerable investment in new large-scale uranium
mining projects. Given that uncovered utility uranium requirements for the period from 2022 to 2035, not including
typical inventory building, are estimated at 1.4 billion pounds U3O8, it is evident that the new future sources of supply
required by the market have not yet been secured by utilities and that once incumbent suppliers have responded to
future demand there is likely to be a further phase of utility procurement directed at incentivizing new projects to meet
long-term demand needs.
6
SELECTED ANNUAL FINANCIAL INFORMATION
MANAGEMENT’S DISCUSSION & ANALYSIS
(in thousands, except for per share amounts)
Continuing Operations:
Total revenues
Exploration expenses
Evaluation expenses
Operating expenses
Net income (loss)
Basic and diluted earnings (loss) per share
(in thousands)
Year Ended
December 31,
2021
Year Ended
December 31,
2020
Year Ended
December 31,
2019
$
$
$
$
$
$
20,000
(4,477)
(15,521)
(12,901)
18,977
0.02
$
$
$
$
$
$
14,423 $
(5,314) $
(3,718) $
(10,594) $
(16,283) $
(0.03) $
15,549
(5,230)
(10,008)
(14,436)
(18,141)
(0.03)
As at
December 31,
2021
As at
December 31,
2020
As at
December 31,
2019
Financial Position:
8,190
Cash and cash equivalents
Working capital(1)
1,597
Investments in uranium
-
257,259
Property, plant and equipment
Total assets
299,998
Total long-term liabilities(2)
74,903
(1) Working capital is a non-IFRS financial measure and is calculated as the value of current assets less the value of current liabilities. At December
31, 2021, the Company’s working capital includes $14,437,000 in portfolio investment, $1,625,000 in non-cash share purchase warrant liabilities,
and a non-cash $4,656,000 deferred revenue liability (December 31, 2020 – $16,657,000 in portfolio investments, and $3,478,000 of non-cash
deferred revenue).
24,992 $
37,571 $
- $
256,870 $
320,690 $
81,565 $
63,998
70,504
133,114
254,462
510,284
97,242
$
$
$
$
$
$
$
$
$
$
$
$
(2) Predominantly comprised of the non-current portion of deferred revenue, non-current reclamation obligations, share purchase warrant liabilities
and deferred income tax liabilities.
SELECTED QUARTERLY FINANCIAL INFORMATION
(in thousands, except for per share amounts)
Results of Operations:
Total revenues
Net earnings (loss)
Basic and diluted earnings (loss) per share
(in thousands, except for per share amounts)
Results of Operations:
Total revenues
Net loss
Basic and diluted loss per share
2021
Q4
2021
Q3
2021
Q2
2021
Q1
$
$
$
$
$
$
3,337 $
(2,648) $
(0.01) $
9,541 $
32,866 $
0.04 $
4,626 $
(2,357) $
(0.00) $
2,496
(8,884)
(0.01)
2020
Q4
2020
Q3
2020
Q2
2020
Q1
4,094 $
(3,095) $
(0.01) $
2,743 $
(5,482) $
(0.01) $
2,926 $
(1,043) $
(0.00) $
4,660
(6,663)
(0.01)
Significant items causing variations in quarterly results
• The Company’s toll milling revenues fluctuate due to the timing of uranium processing at the McClean Lake mill,
as well as changes to the estimated mineral resources of the Cigar Lake mine. Toll milling at McClean Lake was
suspended during second and third quarters of 2020 and again during the first and beginning of the second
quarters of 2021, due to the suspension of mining at the Cigar Lake mine as a result of the COVID-19 pandemic
(‘COVID-19’). See RESULTS OF OPERATIONS below for further details.
7
MANAGEMENT’S DISCUSSION & ANALYSIS
• Revenues from the Closed Mines group fluctuate due to the timing of projects, which vary throughout the year in
the normal course of business.
• Operating expenses fluctuate due to the timing of projects at both the MLJV and the Closed Mines group, which
vary throughout the year in the normal course of business.
• Exploration expenses are generally largest in the first and third quarters, due to the timing of the winter and summer
exploration seasons in northern Saskatchewan. As a result of COVID-19, the 2020 summer exploration program
was deferred to the fourth quarter of 2020. The 2021 summer exploration program commenced in mid-September
and continued into the fourth quarter of 2021 due to the timing of the 2021 ISR field program.
• Other income and expense fluctuates due to changes in the fair value of the Company’s portfolio investments,
share purchase warrants, and uranium investments, all of which are recorded at fair value through profit or loss
and are subject to fluctuations in the underlying share / commodity price. The Company’s uranium investments
and certain of its share purchase warrants are also subject to fluctuations in the US dollar to Canadian dollar
exchange rate.
• The Company’s results are also impacted, from time to time, by other non-recurring events arising from its ongoing
activities, as discussed below where applicable.
RESULTS OF OPERATIONS
REVENUES
McClean Lake Uranium Mill
The McClean Lake property is located on the eastern edge of the Athabasca Basin in northern Saskatchewan,
approximately 750 kilometres north of Saskatoon. Denison holds a 22.5% ownership interest in the MLJV and its
McClean Lake uranium mill, one of the world’s largest uranium processing facilities, which is contracted to process ore
from the Cigar Lake mine under a toll milling agreement. The MLJV is a joint venture between Orano Canada with a
77.5% interest and Denison with a 22.5% interest.
In February 2017, Denison closed an arrangement with Anglo Pacific Group PLC and one of its wholly owned
subsidiaries (the ‘APG Arrangement’) under which Denison received an upfront payment of $43,500,000 in exchange
for its right to receive future toll milling cash receipts from the MLJV under the current toll milling agreement with the
Cigar Lake Joint Venture (‘CLJV’) from July 1, 2016 onwards. The APG Arrangement consists of certain contractual
obligations of Denison to forward to APG the cash proceeds of future toll milling revenue earned by the Company
related to the processing of the specified Cigar Lake ore through the McClean Lake mill, and as such, the upfront
payment was accounted for as deferred revenue.
In response to the COVID-19 pandemic, the CLJV temporarily suspended production at the Cigar Lake mine from the
end of March 2020 until September 2020, and then again from the end of December 2020 until April 2021. The MLJV
temporarily suspended operations at the mill for the duration of the CLJV shutdowns, operating for approximately 30
weeks during the year ended December 31, 2021 (December 31, 2020 – approximately 26 weeks). As noted above,
Denison previously monetized the toll milling revenue to be earned from the processing of the Cigar Lake ore pursuant
to the APG Arrangement. While the temporary suspension of operations at the McClean Lake mill resulted in a decrease
in revenue recognized by Denison, the impact is non-cash and is limited to a reduction in the drawdown of the
Company’s deferred revenue balance.
During the year ended December 31, 2021, the McClean Lake mill processed 12.2 million pounds U3O8 for the CLJV
(December 31, 2020 – 10.1 million pounds U3O8) and recorded toll milling revenue of $3,207,000 (December 31, 2020
– $2,762,000). The increase in toll milling revenue during the year ended December 31, 2021, as compared to the prior
year, is predominantly due to an increase in mill production in the current period.
During the year ended December 31, 2021, the Company also recorded an accretion expense of $3,098,000 on the
toll milling deferred revenue balance (December 31, 2020 – $3,058,000). While the annual accretion expense will
decrease over the life of the agreement, as the deferred revenue liability decreases over time, the accretion expense
increased in 2021 due to the impact of the McClean Lake mill shutdown during 2020. With the mill shut down in the
prior year, the deferred revenue balance increased, as the accretion expense exceeded the drawdown of deferred
revenue, resulting in increased accretion expense in 2021, as compared to 2020.
8
MANAGEMENT’S DISCUSSION & ANALYSIS
Closed Mine Services
Mine decommissioning and environmental services are provided through Denison’s Closed Mines group, which has
provided long-term care and maintenance for closed mine sites since 1997. With offices in Ontario and Quebec, the
Closed Mines group manages Denison’s Elliot Lake reclamation projects and provides third-party post-closure mine
care and maintenance services.
Revenue from Closed Mines services during the year ended December 31, 2021 was $8,829,000 (December 31, 2020
- $8,205,000). The increase in revenue in the year ended December 31, 2021, as compared to the prior year, was due
to an increase in activity at certain care and maintenance sites, slightly offset by a decrease in revenue related to
customer contracts that were not renewed for 2021.
Management Services Agreement with UPC
As discussed in ABOUT DENISON above, prior to July 19, 2021, Denison provided general administrative and
management services to UPC, for which Denison earned management fees and commissions.
During the year ended December 31, 2021, revenue from the Company’s management contract with UPC was
$7,964,000 (December 31, 2020 - $2,604,000). The increase in revenues during year ended December 31, 2021 was
predominantly due to $5,848,000 in termination fee revenue earned upon the termination of the MSA between Denison
and UPC as well as an increase in commission-based fees. These increases were slightly offset by a decrease in net
asset value-based management fees as a result of the early termination of the MSA on July 19, 2021. The increase in
commission-based fees in the year ended December 31, 2021, as compared to the prior year, was the result of an
increase in uranium transactions completed for UPC during second quarter of 2021. Under the terms of the MSA,
Denison earned a 1% commission on the gross value of UPC’s uranium purchases and sales.
OPERATING EXPENSES
Mining
Operating expenses of the mining segment include depreciation and development costs, as well as cost of sales related
to the sale of uranium, when applicable. Operating expenses in the year ended December 31, 2021 were $5,110,000
(December 31, 2020 – $3,742,000), including mining costs of $2,630,000, milling costs of $2,697,000, and reclamation
costs of $280,000, reduced by applicable absorption to inventory for costs attributable to Denison’s share of uranium
production for the year.
Included in milling costs is depreciation expense relating to the McClean Lake mill of $2,053,000 (December 31, 2020
- $1,730,000), as a result of processing approximately 12.2 million pounds U3O8 for the CLJV (December 31, 2020 –
10.1 million pounds U3O8).
Operating expenses for mining and milling activities includes development and other operating costs related to the
MLJV of $3,057,000 (December 31, 2020 –$2,011,000). For the year ended December 31, 2021, these costs
predominantly related to the advancement of the Surface Access Borehole Resource Extraction (‘SABRE’) mining
technology, including the completion of a test mining campaign at the McClean North deposit, as part of a multi-year
test mining program operated by Orano Canada within the MLJV.
The SABRE field test ran from May to September 2021 with four cavities mined and the recovery of approximately
1,500 tonnes of high-value ore ranging in grade from 5% to 16% U3O8. The program was concluded successfully with
no safety, environmental or radiological incidents. Importantly, key operating objectives associated with the test
program – including targets for cavity diameter, rates of recovery, and mine production rates – were all achieved during
the field test.
The majority of the ore recovered from the test mining program was transferred to the McClean Lake mill, resulting in
the production of approximately 176,000 pounds of U3O8 (Denison’s share: approximately 40,000 pounds of U3O8) in
the fourth quarter of 2021.
This test represents the achievement of an important milestone for the SABRE technology. Based on the success of
the 2021 program, Orano and Denison plan to evaluate the potential use of this innovative method for future mining
operations at their jointly owned McClean Lake and Midwest properties.
9
MANAGEMENT’S DISCUSSION & ANALYSIS
Closed Mines Services
Operating expenses during the year ended December 31, 2021 totaled $7,791,000 (December 31, 2020 - $6,849,000).
The expenses relate primarily to care and maintenance services provided to clients, and include labour and other costs.
The increase in operating expenses in the current periods, as compared to the prior year, is predominantly due to an
increase in activity at certain care and maintenance sites.
MINERAL PROPERTY EVALUATION
During the year ended December 31, 2021, Denison’s share of evaluation expenditures was $15,521,000 (December
31, 2020 - $3,718,000). The increase in evaluation expenditures, compared to the prior period, was due to an increase
in Wheeler River evaluation activities, including the 2021 ISR field program. The following table summarizes the
evaluation activities completed during the year ended December 31, 2021.
PROJECT EVALUATION ACTIVITIES
Property
Denison’s ownership(1)
Wheeler River
95%
Evaluation drilling
2,092 metres
(5 large diameter
CSWs(2))
4,392 metres
(10 small diameter
MW’s(3))
6,484 m (15 holes)
Other activities
ISR field testing,
engineering, metallurgical testing,
environmental and sustainability
activities
Notes:
(1) The Company’s effective ownership interest as at December 31, 2021, including the indirect 5% ownership interest that Denison acquired on August
3, 2021 with its acquisition of 50% of JCU. See EQUITY SHARE OF INCOME FROM JOINT VENTURES below for further details regarding the
accounting treatment for Denison’s investment in JCU.
(2) CSW drilling relates to the drilling and installation of new CSWs from surface for the purposes of ISR field testing at Phoenix. Figures include total
evaluation meters drilled and total number of holes completed.
(3) Small diameter evaluation drilling includes HQ/PQ sized diamond drilling either as the widening (reaming) of existing exploration drill holes, or the
drilling of new holes, for the purposes of installing MWs for ISR field testing at Phoenix. Figures include total evaluation metres drilled and total number
of holes completed.
Wheeler River Project
A PFS was completed for Wheeler River in late 2018, considering the potential economic merit of developing the
Phoenix deposit as an ISR operation and the Gryphon deposit as a conventional underground mining operation.
Further details regarding Wheeler River, including the PFS and estimated mineral reserves and resources, are provided
in the Technical Report for the Wheeler River project titled ‘Pre-feasibility Study Report for the Wheeler River Uranium
Project, Saskatchewan, Canada’ with an effective date of September 24, 2018 (‘PFS Technical Report’). A copy of the
PFS Technical Report is available on Denison’s website and under its profile on each of SEDAR and EDGAR.
As a result of the social, financial and market disruptions experienced from the onset of the COVID-19 pandemic in
early 2020, Denison temporarily suspended certain activities at Wheeler River, including the EA program, which is on
the critical path to achieving the project development schedule outlined in the PFS. While the EA process was formally
resumed in 2021, the Company is not currently able to estimate the impact of the delay to the project development
schedule outlined in the PFS, and users are cautioned that the estimates provided therein regarding the start of pre-
production activities in 2021 and first production in 2024 should not be relied upon.
The location of the Wheeler River property, as well as the Phoenix and Gryphon deposits, and existing and proposed
infrastructure, is shown on the map provided below.
10
MANAGEMENT’S DISCUSSION & ANALYSIS
Engineering Activities
2021 ISR Field Test
The 2021 ISR field test represents the most significant engineering related activity for the project in 2021. The program
was designed to further increase confidence and reduce risk in the application of the ISR mining method at Phoenix –
with the detailed results providing the necessary datasets for the permitting and preparation of a further planned
Feasibility Field Test (‘FFT’) for 2022, which is intended to support the FS for the Project, and validate certain key
assumptions in the EA.
•
Test Pattern Installation
A test pattern consisting of five CSWs and 10 additional small diameter monitoring wells (‘MWs’) (together described
as the ‘Test Pattern’) was successfully installed within the Phase 1 area of the Phoenix deposit (see the map below
for the placement of the CSWs and MWs) during the summer months (see Denison press release dated July 29,
2021).
11
MANAGEMENT’S DISCUSSION & ANALYSIS
During installation of the Test Pattern, additional high-grade mineralization was intersected in GWR-045, including
22.0% U3O8 over 8.6 metres, located outside of the existing high grade resource domain associated with Zone A
and Phase 1 of the phased mining approach currently planned for Phoenix (see Denison press release dated July
29, 2021). GWR-045 was completed to install a MW to the northeast of the Test Pattern. Based on the mineral
resources currently estimated for Phoenix, GWR-045 was expected to intersect low-grade uranium mineralization
along the northwestern margin of the deposit, approximately 5 metres outside of the boundary of the Phoenix Zone
A high-grade resource domain (see cross section figure below for location of GWR-045 relative to the Phoenix high-
grade resource domain). The drill hole, however, intersected a thick interval of high-grade unconformity associated
uranium mineralization.
A similar outcome resulted from the completion of GWR-049, which was completed approximately 17 metres to the
northeast of GWR-045. Drill hole GWR-049 intersected a thick interval of high-grade unconformity-associated
uranium mineralization (including 24.9% eU3O8 over 4.2 metres) that, coupled with the results of GWR-045, is
expected to expand the volume of the high-grade domain to the northwest outside of the extents of the same in the
current resource model. Follow-up drilling designed to test the extent of the potential extension of the high-grade
domain was completed during late 2021. The results are summarized below with the Company’s exploration
activities.
Following the installation of the Test Pattern, three methods of permeability enhancement were successfully
evaluated on the five CSWs, with post-permeability enhancement testing resulting in observed improvement in
hydraulic responses and inter-well connectivity within the Test Pattern. These results exhibit and confirm the ability
to engineer additional access to the natural permeability within the deposit. Permeability enhancement methods
included the use of the MaxPERF drilling tool, as well as wireline-conveyed tools designed to perforate and stimulate
well production using a controlled propellant. The wireline tools can effectively “clean out” restricted pathways within
the well screen, well bore, and the geological formation and provide increased flow rates in the wells by intersecting
and connecting to the naturally occurring fractures within the ore zone.
12
MANAGEMENT’S DISCUSSION & ANALYSIS
Twenty single-well injection tests were completed on the Test Pattern to evaluate natural permeability and the
efficacy of permeability enhancement methods deployed in the CSWs. Nine single-well pump tests were completed
amongst the five CSWs and four of the MWs to evaluate permeability, sustainable pumping rates, hydraulic
connectivity and baseline groundwater conditions. Importantly, testing showed good hydraulic connection between
the CSWs in the ore zone horizon and no significant responses in any of the MWs in overlying or underlying horizons
(see figure below). One step-rate injection test was conducted on the center CSW (GWR-040) to evaluate hydraulic
connectivity, maximum injection rates and injection pressures.
•
Full-Scale Well Pattern Pump and Injection Test
A full-scale well pattern injection and pumping test was conducted to determine hydraulic connectivity for the Test
Pattern as a whole, and to evaluate potential production rates for the pattern. The test was run as a modified 4-spot
pattern as there was an unanticipated failure of the submersible pump in GWR-042. During the test, injection rates
were matched to pumping extraction rates for balanced flow in the Test Pattern. Pumped groundwater from each
of the outer wells (GWR-038, GWR-039, and GWR-041) was recycled for injection in the center well (GWR-040) to
create a closed system. Production rates for the Test Pattern achieved a sustainable rate of 45.3 litres per minute
(‘L/min’) injection in GWR-040 with minimal pressure on surface (less than 180 psi) balanced with 15.1 L/min
extraction at each GWR-038, GWR-039 and GWR-041. This test fundamentally achieved the 50 L/min flow rate
assumed in the PFS for an operating well pattern. Hydraulic control of the Test Pattern was confirmed by no
significant hydrologic responses observed in any of the overlying or underlying MWs.
•
Ion Tracer Test
Following the full-scale injection and pumping test, an ion tracer test was completed using the 4 functional CSWs
in the Test Pattern. Flow rates were run at the same levels as the full-scale well pattern test with 45.3 L/min injection
at the center well and a balanced extraction flow of 15.1 L/min at each of the three outer wells. The ion tracer,
consisting of a 15% concentration of potassium chloride (‘KCl’) by weight, was injected as an initial slug into the
Test Pattern at GWR-040, followed by a chase phase involving the recirculation of water extracted from the three
outer wells (closed system). The chase phase continued until peak concentrations of the ion tracer, measured in
13
MANAGEMENT’S DISCUSSION & ANALYSIS
total dissolved solids (‘TDS’), were observed at the three extraction wells (GWR-038, GWR-039 and GWR-041),
followed by a decline in TDS prior to commencement of a remediation test.
Breakthrough of the ion tracer, as observed by an increase in the TDS, occurred at the three extraction wells within
9 hours (GWR-039), 12 hours (GWR-041), and 14 hours (GWR-038). These breakthrough times are consistent with
previous hydrogeological modelling conducted by Petrotek Corporation (see press release dated June 4, 2020).
• Remediation Test
After completion of the ion tracer test, a “clean-up” remediation test was conducted to simulate the ability to remove
injected fluid from the Test Pattern. For this test, injection was halted at the center well (GWR-040) and the three
extraction wells were pumped to remove the remaining injected ion tracer. Tracer concentrations measured during
the eight-day clean-up simulation, as observed by field TDS measurements, declined to as low as 13% of the peak
TDS value in GWR-038, 11% of the peak TDS value in GWR-041, and 4% of the peak TDS value in GWR-039.
• Hydrogeological Monitoring
Monitoring during the ion tracer test and subsequent cleanup test included: 376 field measurements of TDS from
the CSW extraction wells to identify tracer concentrations; logging of water levels in each of the CSWs along with
all of the surrounding MWs at five minute intervals; logging of TDS values at 5 minute intervals in the three overlying
MWs to confirm the absence of any tracer concentrations in the overlying horizons; and daily groundwater sampling
to send for lab analysis to confirm TDS values measured in the field and the exact concentration of the KCl tracer.
The ability to maintain hydraulic control was established by sampling the three overlying MWs for TDS values before
and after the ion tracer test. No elevated values in TDS were observed during the test, thus confirming there was
no migration of the tracer to overlying horizons.
Data collected as part of the 2021 field program will be utilized to update the hydrogeological model for Phoenix,
and to provide the necessary datasets for the permitting and preparation of the 2022 FFT.
• Ongoing Permeameter Analysis
In addition to the hydrogeological tests described above, over 1,000 drill core samples were collected from historic
holes, re-logged for hydrogeologic characteristics, and analyzed for permeability utilizing the on-site permeameter.
Samples were selected to ensure the database of on-core permeability results included representative samples
from all of the planned mining phases at Phoenix.
• COVID-19
The Company is committed to ensuring that the Wheeler River site is a safe operating environment for its staff and
contractors and that the Company's field activities do not compromise the health and safety of the residents of
northern Saskatchewan. In 2020, the Company's Occupational Health and Safety Committee developed a
comprehensive guide for the safe resumption of work at Wheeler River. The protocols consider the unique health
and safety risks associated with operating a remote work camp amidst the ongoing COVID-19 pandemic. Public
health guidelines and best practices (including testing) have been incorporated into the Company's protocols.
The 2021 ISR Field Test was completed over an eight-month period and involved the on-site support of over 100
different staff and contractors. COVID-19 rapid testing was completed regularly at site with no positive cases
reported during the entire program. These results helped to ensure the extensive scope of the 2021 ISR Field Test
was able to be completed on schedule and demonstrates the effectiveness of the Company’s COVID-19 protocols,
as well as the Company’s focus on ensuring the safety of its employees and communities.
For further information regarding the 2021 field program results, see the press release dated October 28, 2021.
Groundwater Modelling and ISR Simulations
In the fourth quarter of 2021, detailed groundwater modelling and ISR simulations were conducted for Phase 1 of the
Phoenix deposit. These tests were calibrated using the results of the 2021 ISR field test, and studied the physical flow
of water through the groundwater system including flow path, sweep efficiency, and groundwater restoration analysis.
The results from these tests further support the Proof of Concept analysis completed in 2019 (see Denison press
release dated June 4, 2020) and support the assumptions made in the PFS.
14
MANAGEMENT’S DISCUSSION & ANALYSIS
Metallurgical Testing
Metallurgical test work continued during 2021 with multiple tests carried out at the SRC Laboratories in Saskatoon
(‘SRC’).
• Core Leach Tests:
The core leach tests are specialized leach tests, involving the testing of intact mineralized core samples,
representative of the in-situ conditions at Phoenix and designed to evaluate uranium recovery specifically for the
ISR mining method.
During 2021, five core leach samples were tested at SRC.
Four cores representing the high grade/low clay characteristics of the majority of the mineralization in the Phase 1
mining area have been tested to date, with results showing steady-state and average uranium bearing solution
(‘UBS’) head grades significantly above the 10 grams per litre (‘g/L’) level used in the PFS. Given this result, the
Company decided to adapt its plans for the remaining metallurgical test work, including the bench-scale tests of the
unit operations for the processing plant, to reflect an assumed UBS head-grade recovered from the wellfield of
15g/L.
In addition to the high-grade/low clay characteristics of Phase 1, the Phoenix ISR operation is also expected to
encounter comparatively rare and isolated areas with lower uranium grades and high clay content. These areas
may result in a limited number of zones of reduced permeability. In order to understand the ISR leach dynamics in
these areas, test work in 2021 also included a sample representing high clay characteristics (above 25% clay).
Results obtained from tests of this core confirm that high clay content can impact the natural permeability of the ore
body and lead to lower UBS head-grades. Importantly, testing also confirmed that permeability enhancement
techniques have the potential to normalize these areas and significantly improve UBS head-grade concentrations
to levels that align with core leach tests carried out using samples with higher grades and lower clay content.
During 2021, reclamation tests were also completed on two of the core samples described above (one high
grade/low clay core and one high clay content core). The tests used alkaline solutions that have been employed in
other ISR operations, at varying concentrations, in order to identify the most efficient approach to flush and/or
neutralize the low-pH solution planned for mining the Phoenix deposit.
• Column Leach Tests:
The column leach test program was completed in the second quarter of 2021. The primary purpose of the column
leach tests was to recover sufficient volumes of UBS to facilitate bench-scale tests of the unit operations outlined
in the flowsheet for the Phoenix processing plant. Over 900 litres of UBS was produced from 64 Kilograms (‘kg‘) of
Phoenix core samples. Combined results from the four column leach tests were highly positive, with calculated UBS
head-grade from the four columns averaging 19 g/L, which further supports the decision to increase the overall UBS
head-grade assumption for Phoenix.
While not the primary purpose of the column leach tests, average reagent addition rates from the column leach
tests (1.3 kg acid / kg U3O8 and 1.2 kg oxidant / kg U3O8) have also provided useful information that is supportive
of the values published in the PFS.
• Bench Scale Tests:
Some of the 900 litres of UBS generated during the column leach tests have been utilized for several batch tests
intended to confirm the anticipated primary unit processes for the Phoenix operation, including: iron/radium
precipitation, uranium precipitation and water treatment.
The iron and radium precipitation stage was tested with 20 different conditions using 2 litre UBS batches for each
test to define optimal precipitation parameters. Using the optimized parameters defined during the iron and radium
precipitation tests, four 5 litre batches of UBS were tested to confirm uranium precipitation parameters.
During the fourth quarter of 2021, the Company commenced processing a high volume of UBS (120 litres) using
optimized test conditions in order to finalize the surface processing plant design with process flow sheet, mass
balance and major process equipment selection.
15
MANAGEMENT’S DISCUSSION & ANALYSIS
Testing efforts continue and are currently focused on water treatment optimization and characterization of the water
effluent quality and associated waste streams.
Additionally, over 20 further metallurgical tests have been completed to support the planning for the FFT.
Feasibility Study
In September 2021, Denison announced the decision of the WRJV to advance the ISR mining operation proposed for
Phoenix to the FS stage and the selection of Wood PLC as independent Lead Author.
The completion of the FS is a critical step in the progression of the Project and is intended to advance de-risking efforts
to the point where the Company and the WRJV will be able to make a definitive development decision. Key objectives
of the Study are expected to include:
• Environmental Stewardship:
Extensive planning and technical work undertaken as part of the ongoing EA, including applicable feedback from
consultation efforts with various interested parties, is expected to be incorporated into the FS project designs to support
our aspiration of achieving a superior standard of environmental stewardship that meets and exceeds the anticipated
environmental expectations of regulators and aligns with the interests of local Indigenous communities;
• Updated Estimate of Mineral Resources:
Mineral resources for Phoenix were last estimated in 2018. Since then, additional drilling has been completed in and
around the Phoenix deposit as part of various ISR field tests, including drill hole GWR-045 and GWR-049, and
exploration drilling. The updated mineral resource estimate will form the basis for mine planning in the FS;
• Mine Design Optimization:
FS mine design is expected to reflect the decision to adopt a freeze wall configuration for containment of the ISR well
field (see news release dated December 1, 2020), as well as the results from multiple field test programs and extensive
hydrogeological modelling exercises, which have provided various opportunities to optimize other elements of the
Project – including well pattern designs, permeability enhancement strategies, and both construction and production
schedules;
• Processing Plant Optimization:
FS process plant design is expected to reflect the decision to increase the ISR mining uranium head-grade to 15 g/L
(see news release dated August 4, 2021), as well as the results from extensive metallurgical laboratory studies
designed to optimize the mineral processing aspects of the Project; and
• Class 3 Capital Cost Estimate:
The FS is also intended to provide the level of engineering design necessary to support a Class 3 capital cost estimate
(AACE international standard with an accuracy of -15% /+25%), which is expected to provide a basis to confirm the
economic potential of the Project highlighted in the PFS completed in 2018 (see news release dated September 24,
2018).
Environmental and Sustainability Activities
EA Activities
Technical studies related to the EA continued throughout 2021. Certain assessment components, including the
ecological risk assessment and hydrogeological modelling, were of significant focus in order to support the engineering
design and mitigation measures for the Project. In addition, the Company’ completed assessments on air quality, the
terrestrial environment, hydrology and worker health and safety. The Company has worked closely with the primary
regulatory agencies involved in the Project, the Canadian Nuclear Safety Commission (‘CNSC’) and the Saskatchewan
Ministry of Environment (‘SKMOE’), in order to ensure that the Company’s methodology for the EA assessment
components is in line with regulatory requirements and expectations.
In addition to the technical studies which progressed during the year, the Company continued to undertake engagement
activities with interested parties in accordance with the requirements and guidelines for a Federal and Provincial EA.
16
MANAGEMENT’S DISCUSSION & ANALYSIS
The Company met with multiple interested parties to discuss ongoing EA studies and Project components, and land
use studies are underway, the results of which are expected to be incorporated in the draft Environmental Impact
Statement (‘EIS’) planned for submission in 2022.
Community Engagement Activities
During 2021, Denison executed two agreements with ERFN: a Participation and Funding Agreement, which outlines a
framework and funding agreement to facilitate ERFN’s participation and engagement in the Wheeler EA process, and
an Exploration Agreement, whereby ERFN consents to the Company’s exploration and evaluation activities, provided
Denison meets the commitments made therein. In the Exploration Agreement, Denison has committed to providing
support for ERFN’s interests in relation to community development and benefits, environmental protection and
monitoring, as well as a sustainable and predictable consultation and engagement process.
MINERAL PROPERTY EXPLORATION
During the year ended December 31, 2021, Denison’s share of exploration expenditures was $4,477,000 (December
31, 2020 – $5,314,000). The decrease in exploration expenditures in the year ended December 31, 2021, compared
to the prior year, was due to a decrease in winter exploration activities in the current year.
Exploration spending in the Athabasca Basin is generally seasonal in nature, reflecting increased field activity during
the winter exploration season (January to mid-April) and summer exploration season (June to mid-October).
The following table summarizes the exploration activities completed during the year ended December 31, 2021. The
exploration drilling at Wheeler River, Moon Lake South and Moon Lake North relates to 2021 drilling programs which
commenced late in the third quarter of 2021, whereas the winter drilling programs at the three minority interest
properties that are not Company operated, were completed during the first quarter of 2021.
EXPLORATION & EVALUATION ACTIVITIES
Drilling in metres (m)(1)
-
Denison’s ownership(1)
100.00%
Property
Ford Lake
McClean Lake
Midwest
Moon Lake South
Moon Lake North
Waterfound
Wheeler River
Wolly
Total
22.50%
25.17%
75.00%(2)
100%
11.78%(3)
95%(4)
21.32%(5)
4,101 (15 holes)
2,669 (8 holes)
3,356 (4 holes)
1,384 (2 holes)
Other activities
Geophysical Survey
-
Geophysical Survey
-
-
-
Geophysical Survey
5,906 (12 holes)
2,119 (11 holes)
19,535 (52 holes)
-
-
(1) The Company’s effective ownership interest as at December 31, 2021.
(2) The partner, CanAlaska Uranium Ltd, funded their 25% portion of exploration expenditures during 2021 and ownership interests are unchanged
for 2021
(3) Denison elected not to funds its 12.32% share of the $473,000 2021 geophysics program implemented by the operator, Orano Canada. Accordingly,
the Company’s ownership interest decreased by 0.54% to 11.78%.
(4) The Company’s effective ownership interest as at December 31, 2021, including the indirect 5% ownership Denison acquired on August 3, 2021,
with its acquisition of 50% of JCU. See EQUITY SHARE OF INCOME FROM JOINT VENTURES below for further details regarding the accounting
for Denison’s investment in JCU.
(5) Denison elected not to funds its 21.89% share of the $845,000 2021 drilling program implemented by the operator, Orano Canada. Accordingly,
the Company’s ownership interest decreased by 0.57% to 21.32%.
(6) The Company reports total exploration metres drilled and the number of holes that were successfully completed to their target depth.
The Company’s land position in the Athabasca Basin, as of December 31, 2021, is illustrated in the figure below. The
size of the Company’s Athabasca land package increased in the fourth quarter to 296,661 hectares (211 claims) due
to the staking of additional clams bordering the Company’s Bell Lake property. The land position reported by the
Company excludes the land positions held by JCU.
17
MANAGEMENT’S DISCUSSION & ANALYSIS
Wheeler River Exploration
Denison’s share of exploration costs at Wheeler River was $2,255,000 during the year ended December 31, 2021
(December 31, 2020 – $3,336,000), which includes a portion of camp support and stand-by costs.
During early 2021, Wheeler River exploration work included desktop analysis and interpretation of the results of the
2020 exploration program and the detailed planning for the 2021 exploration drilling program.
The 2021 Wheeler River exploration drilling program commenced late in the third quarter and was completed in
December 2021. The program consisted of 12 diamond drill holes for a total of 5,906 metres drilled in three target
areas: K West, M Zone, and Phoenix Zone A. Indicative structure, alteration, and elevated radioactivity were
encountered at K West and M Zone, while mineralization was extended to the NW of the previously identified extents
of Phoenix Zone A.
18
MANAGEMENT’S DISCUSSION & ANALYSIS
Phoenix Zone A
Drilling to support the 2021 ISR field test discovered additional high-grade uranium mineralization outside of the
previously defined extents of the high-grade ore domain at Phoenix Zone A in drill holes GWR-045 and GWR-049
(discussed more fully above).
Given the intersection of thick, high-grade unconformity-associated uranium mineralization outside of the boundary of
the Phoenix Zone A high-grade resource domain, Denison's exploration team completed follow-up drilling in the vicinity
of GWR-045 and GWR-049 once the 2021 ISR field test program was completed. Two drill holes were completed for
a total of 874 metres.
19
MANAGEMENT’S DISCUSSION & ANALYSIS
20
MANAGEMENT’S DISCUSSION & ANALYSIS
WR-784 was a vertical hole drilled to test the extents of high-grade mineralization, discovered outside of the previously
interpreted Phoenix Zone A high-grade mineralized domain by drill hole GWR-045, by targeting the unconformity
approximately 6 metres northwest of the mineralized intersection in GWR-045. The drill hole intersected perched
uranium mineralization grading 1.2% eU3O8 over 2.1 metres from 406.25 metres. The presence of perched
mineralization is expected to result in an expansion of the volume of the low-grade resource wireframe at Phoenix Zone
A, and provides a potential target for future exploration, as no previous drill testing in the vicinity of Phoenix has
identified or targeted perched mineralization to the northwest of the WS-shear, which is the primary geological control
for the deposit.
21
WR-787 was a vertical hole drilled to test the extents of the high-grade mineralization discovered in GWR-049 by
targeting the unconformity approximately 6 metres north of the mineralized intersection of GWR-049. GWR-787
encountered high-grade unconformity-associated mineralization grading 3.6% eU3O8 over 4.5 metres from 411.40
metres.
MANAGEMENT’S DISCUSSION & ANALYSIS
The final assay results from GWR-045, GWR-049, WR-784 and WR-787 were received in early 2022, and confirmed
the presence of high-grade mineralization in each drill hole. However, the Company is reporting radiometric equivalent
grades ("eU3O8") for these holes, instead of final assay results, as significant core loss was encountered in each of
these mineralized intervals.
Phoenix Zone A – Select 2021 Mineralized Intersections
Hole
Number
GWR-045
GWR-049
WR-784
WR-787
Including4
From
(m)
406.95
408.95
406.25
411.40
413.00
To
(m)
415.55
413.15
408.35
415.90
413.70
Length(1)
(m)
Grade
(% eU3O8)(2,3)
8.6
4.2
2.1
4.5
0.7
22.0(4)
24.9(4)
1.2
3.6
15.2
Notes:
1. As the drill holes are oriented vertically and the mineralization is interpreted to lie nearly horizontal, the drill
intersection is interpreted to represent the true thickness.
2. eU3O8 is a radiometric equivalent grade U3O8 derived from a calibrated total gamma down-hole probe.
3. Composited above a cut-off grade of 0.1% eU3O8 unless otherwise indicated.
4. Composited above a cut-off grade of 1.0% eU3O8.
22
MANAGEMENT’S DISCUSSION & ANALYSIS
K West
K West is located in the northwest portion of the Wheeler River property. The K West fault is the primary exploration
target in this area, which lies within the K West conductive trend, at or near the contact between a graphitic pelite and
underlying Archean granite. The K West fault has been drill-defined over a strike length of approximately 15 kilometres,
on both the Wheeler River property and on adjacent properties located to the north of Wheeler River, where several
zones of high-grade unconformity-hosted mineralization have been identified (including on Denison’s 30% owned Mann
Lake property). Historical drilling at K West, which has been interpreted to have intersected the unconformity anywhere
from 30 to 100 metres hanging wall of the K West fault, has defined a broad zone of anomalous uranium pathfinder
geochemistry, specifically copper, nickel, and cobalt.
A total of eight drill holes were completed at K West as part of the 2021 exploration program, with a focus on evaluating
the extents of mineralization encountered in 2020 by drill hole WR-741AD2, which intersected high-grade uranium
mineralization straddling the unconformity contact (2.14% U3O8 over 4.0 metres). While all eight holes drilled at K West
encountered prospective structure and alteration, only three holes WR-741AD3, WR-782, and WR-785 encountered
uranium mineralization above a 0.05% eU3O8 cut-off grade.
WR-741AD3, drilled at an azimuth of 293.5° and inclination of -62.8°, tested the unconformity approximately 11 metres
to the northwest of mineralization encountered in WE-741AD2 and intersected low-grade, perched mineralization
located approximately 10 metres above the unconformity contact, grading 0.12% eU3O8 over 5.2 metres from 633.1
metres.
WR-782 was drilled to test the K West fault approximately 300 metres along strike to the southwest of the mineralized
intercept in WR-741AD2. The hole, oriented at an azimuth of 280.0° and inclination of -74.0°, encountered a grey
alteration and dravitic gouge associated with a fault in the basal sandstone, interpreted to represent the up-dip
expression of post-Athabasca brittle reactivation along the K West fault. Low-grade mineralization was identified
immediately above the unconformity contact, grading 0.08% eU3O8 over 1.0 metres from 592.85 metres. WR-782 is
interpreted to have intersected the unconformity at or very close to the unconformity subcrop of the K West fault.
WR-785, drilled at an azimuth of 302.0° and inclination of -74.2°, was drilled approximately 850 metres along strike to
the south of WR-782, targeting the subcrop of the K West fault at the unconformity. The hole intersected low-grade
unconformity-associated mineralization grading 0.07% eU3O8 over 1.6 metres from 592.8 metres associated with
moderate clay alteration and quartz dissolution approximately 1.2 metres above the unconformity contact. WR-785 is
interpreted to have overshot the optimal target on this fence, intersecting the unconformity approximately 15 metres
hanging-wall to the K West fault.
Assay results are pending for the 2021 K West drill holes. Accordingly, mineralized intersections from 2021 exploration
drilling at K West are reported on a preliminary basis as eU3O8 in the table below.
MINERALIZED DRILL RESULTS FOR 2021 K WEST DRILL HOLES
Hole Number
WR-741AD3
WR-782
WR-785
From
(m)
633.1
592.8
592.8
To
(m)
638.3
593.8
594.4
Length(1)
(m)
Grade
(% eU3O8)(2,3)
5.2
1.0
1.6
0.12
0.08
0.07
Notes:
1. Lengths indicated are the down-hole length and do not represent the true thickness of mineralization.
2. eU3O8 is a radiometric equivalent grade U3O8 derived from a calibrated total gamma down-hole probe.
3. Composited above a cut-off grade of 0.05% eU3O8 unless otherwise indicated.
M Zone
M Zone is located approximately 5.5 kilometres east of Phoenix and lies roughly 700 metres from the McArthur River
– Key Lake haul road. Denison’s exploration team conducted a core-relogging program in 2018 and identified several
historical drill holes at M Zone that encountered indicative structure, alteration, elevated radioactivity, or anomalous
pathfinder geochemistry worthy of follow-up.
23
MANAGEMENT’S DISCUSSION & ANALYSIS
Two drill holes were completed at M Zone as part of the 2021 exploration program, focused on testing the M Zone fault
in the vicinity of 2020 drill hole WR-778, which intersected a wide reverse fault zone in the lower sandstone, highlighted
by multiple basement wedges, intense hydrothermal alteration, and a broad interval of weak uranium mineralization.
Drill hole WR-788A was drilled to test the down-dip projection of mineralization hosted within the reverse fault structure
intersected in 2020 by drill hole WR-778. The hole intersected the unconformity approximately 20 metres southeast of
WR-778. While the hole successfully intersected the M Zone structure at depth, no significant elevated radioactivity
was observed in the drill hole.
WR-789 was drilled to test for unconformity-associated mineralization by targeting the unconformity subcrop of the M
Zone fault between historical holes WR-212 and ZM-07. The hole intersected multiple localized brittle faults within the
lowermost 14 metres of the sandstone column, interpreted to represent the sandstone expression of brittle reactivation
of the M Zone structure. Elevated radioactivity was observed at the unconformity contact, but no mineralization
exceeding a 0.05% eU3O8 cut-off was identified.
Exploration Pipeline Properties
Ford Lake
Exploration expenses at Ford Lake during the year ended December 31, 2021 were $653,000 (December 31, 2020 –
$202,000). During the first and second quarters of 2021, a 6 line Small Moving Loop (‘SML’) Electromagnetic (‘EM’)
survey was conducted on the Company’s Ford Lake property to resolve a complex, multiple conductor trend. Planning
and permitting activities commenced in the fourth quarter to support a planned 2022 exploration drilling program
designed to test prospective conductive anomalies identified from the 2021 SML EM survey.
Moon Lake North
Exploration expenses at Moon Lake North during the year ended December 31, 2021 were $303,000 (December 31,
2020 – $125,000). During the fourth quarter of 2021, an exploration drilling program was completed, based out of
Denison’s Wheeler River camp, in conjunction with drilling on Denison’s Wheeler River and Moon Lake South
properties. A total of 1,384 meters was drilled in two diamond drill holes, which were designed to evaluate the CR-3
conductive corridor by drill testing a conductive anomaly from the 2020 Stepwise Moving Loop (‘SWML’) EM survey.
A graphitic semibrittle fault was intersected in each of the holes completed, which was interpreted to represent the CR-
3 conductor.
Moon Lake South
Denison’s share of exploration expenses at Moon Lake South during the year ended December 31, 2021 were
$499,000 (December 31, 2020 – $296,000). The 2021 Moon Lake South exploration drilling program commenced in
early September 2021 and was completed during the fourth quarter of 2021. The program was designed to evaluate
the CR-3 conductive corridor by drill testing conductive anomalies identified from the 2020 SML EM survey coincident
with resistivity anomalies identified during the 2017 resistivity survey. A total of four holes were completed to target
depth, for a total of 3,356 metres. Low-grade unconformity associated uranium mineralization was intersected in two of
four holes completed, as determined from total gamma down-hole probe data.
The 2021 exploration drilling program successfully explained the conductive response outlined in the 2020 SWML EM
survey. Taken together with previous drill testing at Moon South, Denison has now identified three mineralized
occurrences on the property over a strike length of approximately 4 kilometres along the CR-3 conductive corridor.
McClean Lake
The McClean Lake property is operated by Orano Canada and is host to the McClean mill and several unmined uranium
deposits, including Caribou, Sue D, Sue E (partially mined out) and the McClean North and South pods. A diamond
drilling program consisting of 15 drill holes totaling 4,101 metres was recently completed at McClean Lake during 2021.
Denison’s share of exploration expenses at McClean Lake during the year ended December 31, 2021 were $238,000
(December 31, 2020 – $nil).
The 2021 exploration program was designed to test for the potential expansion of previously discovered mineralization
in the McClean South 8W and 8E pods, as well as to test for new mineralization in the surrounding area. Three of the
final four drill holes completed returned uranium mineralization at the McClean South target area, with the results
24
MANAGEMENT’S DISCUSSION & ANALYSIS
highlighted by drill hole MCS-34, which returned 8.67% U3O8 over 13.5 metres (including 78.43% U3O8 over 1.1
metres).
Midwest
The Midwest property is operated by Orano Canada and is host to the high-grade Midwest Main and Midwest A uranium
deposits, which lie along strike and within six kilometres of the THT and Huskie deposits on Denison’s 66.90% owned
Waterbury Lake project. The Midwest and Waterbury deposits are all located in close proximity to existing uranium
mining and milling infrastructure – including provincial highways, powerlines, and Denison’s 22.5% owned McClean
Lake mill. Denison’s share of exploration expenses at Midwest during the year ended December 31, 2021 were
$260,000 (December 31, 2020 – $nil).
The 2021 Midwest exploration program consisted of 2,669 metres of diamond drilling in 8 holes completed over four
different target areas: The Camille Zone (four holes), Midwest Main (one hole), the Dam Zone (one hole), and the
Points North Zone (two holes). Elevated radioactivity and indicative alteration were identified from drilling in each of
these areas.
In addition to the completed diamond drilling, 7.75 km of ML-TEM data was collected from four survey lines at the
Points North Zone (2 lines), the Dam Zone (1 line), and the Simon Zone (1 line).
Waterfound
The Waterfound River project is operated by Orano Canada. A total of 30.5 kilometres of moving-loop transient
electromagnetic (‘ML-TEM’) data was collected over the northeastern portion of the D-1 and E-2 conductors in order to
locate and refine the positions of these conductors for the purpose of developing drill targets for future drilling programs.
Denison elected not to fund the 2021 exploration program at Waterfound and thus the Company’s ownership interest
was diluted from 12.32% to 11.78%.
Wolly
The Wolly project is operated by Orano Canada. The 2021 Wolly exploration program consisted of 2,119 metres of
diamond drilling in 11 completed drill holes. Drilling was focused on three areas: Top Creek, Moonlight, and Geneva.
Elevated radioactivity and alteration indicative of a potentially mineralizing system were encountered in all three areas.
Denison elected not to fund the 2021 exploration program at Wolly and thus the Company’s ownership interest was
diluted from 21.89% to 21.32%.
GENERAL AND ADMINISTRATIVE EXPENSES
During the year ended December 31, 2021, total general and administrative expenses were $9,691,000 (December
31, 2020 - $7,609,000). These costs are principally comprised of head office salaries and benefits, office costs in
multiple regions, audit and regulatory costs, legal fees, investor relations expenses, project costs, and all other costs
related to operating a public company with listings in Canada and the United States. The increase in general and
administrative expenses during the year ended December 31, 2021 was predominantly due to an increase in employee
costs, as well as an increase in compliance costs driven by an increase in retail investor ownership in Denison shares
and the costs related to their participation in Denison’s annual general meeting.
The increase in employee costs in the year ended December 31, 2021 is due to an increase in headcount, an increase
in non-cash share-based compensation expense driven by the impact of the Company’s increased share price and
share price volatility on the valuation of share-based compensation awarded in late March 2021, as well as an increase
in bonus expense. In order to preserve cash in early 2020, the Company settled 2019 bonuses for the executive team
and the majority of staff with a grant of restricted share units (‘RSUs’). The cost of RSUs is expensed over the three-
year vesting period of the units, whereas cash bonuses, by comparison, are fully expensed at the time of approval.
During 2021, the 2020 bonuses awarded to staff and executives were paid in cash, resulting in a change in the timing
of the recognition of the expense.
OTHER INCOME AND EXPENSES
During the year ended December 31, 2021, the Company recognized net other income of $44,163,000 (December 31,
2020 – net other expense of $95,000).
The main drivers of other income/expense are as follows:
25
MANAGEMENT’S DISCUSSION & ANALYSIS
Fair value gains or losses on uranium investments
The majority of the proceeds from the Company’s March 2021 unit offering (see below for further details) were used to
fund the purchase of 2,500,000 pounds of U3O8 to be held as a long-term investment to strengthen the Company’s
balance sheet and potentially enhance its ability to access future project financing in support of the future advancement
and/or construction of Wheeler River. Given that this material is held for long-term capital appreciation, the Company’s
position is measured at fair value with changes in fair value between reporting dates recorded through profit and loss.
During the year ended December 31, 2021, the Company completed the purchase of 2,500,000 pounds U3O8 at a
weighted average cost of $36.67 (US$29.66) per pound U3O8 (including purchase commissions of $0.05 (US$0.04)
per pound U3O8). As at December 31, 2021, the spot price of U3O8 was $53.25 (US$42.00) per pound U3O8, resulting
in mark-to-market gains for the year ended December 31, 2021 of $41,440,000 on these uranium investments
(December 31, 2020 - $nil).
Fair value gains or losses on portfolio investments
During the year ended December 31, 2021, the Company recognized gains on portfolio investments carried at fair value
of $10,454,000 (December 31, 2020 - gain $5,046,000). Gains and losses on investments carried at fair value are
driven by the closing share price of the related investee at the end of the year, or, as applicable, immediately prior to
disposal.
Fair value gains or losses on warrants on investments
During the year ended December 31, 2021, the Company sold (1) 32,500,000 common shares of GoviEx and (2)
32,500,000 GoviEx Warrants for combined gross proceeds of $15,600,000. The gross proceeds were allocated to the
shares and GoviEx Warrants based on their relative fair values at the time of sale, resulting in allocated proceeds of
$12,826,000 for the share sale and $2,774,000 for the GoviEx Warrants. The original cost of the shares was
$2,698,000.
The GoviEx Warrants, entitle the holder to acquire one common share of GoviEx owned by Denison in exchange for
$0.80 during the 18 month life of the warrant and are accounted for as a derivative liability. At each period end until the
GoviEx Warrants are exercised or expire, the warrants are revalued and the revaluation gains and losses are recorded
in other income and expense.
During the year ended December 31, 2021, the Company recorded a fair value gain on the GoviEx Warrants of
$1,149,000 (December 31, 2020 - $nil). The fair value gain is predominantly driven by a decrease in share price of
GoviEx at period end and the increase in the GoviEx share price volatility.
Fair value gains or losses on share purchase warrants
In February and March 2021, Denison completed two equity offerings involving the issuance of units, which were
comprised of one common share and one half of a common share purchase warrant. Each full warrant entitles the
holder to acquire one common share of the Company at a pre-determined exercise price for 24 months after issuance.
The exercise prices for the share purchase warrants are denominated in US dollars, which differs from Company’s
Canadian dollar functional currency, and therefore the warrants are classified as a non-cash derivative liability, rather
than equity, on the Company’s statement of financial position.
At the date of issuance of the units, the gross proceeds of each offering were allocated between the common shares
and the common share purchase warrants issued using the relative fair value basis approach, and the amount related
to the warrants was recorded as a non-current derivative liability. At each period end until the common share purchase
warrants are exercised or expire, the warrants are revalued, with the revaluation gains or losses recorded in other
income and expense.
During the year ended December 31, 2021, the Company recorded a fair value loss of $7,104,000 on the revaluation
of the Denison share purchase warrants (December 31, 2020 - $nil). The fair value loss in the year was predominantly
driven by the increase in Company’s share price between the time of issuance and period end as well as an increase
in share price volatility.
Foreign exchange losses
During the year ended December 31, 2021, the Company recognized a foreign exchange loss of $1,295,000 (December
31, 2021 – foreign exchange loss of $529,000). The foreign exchange loss in the year ended December 31, 2021 is
predominantly due the impact of the decrease in the US dollar to Canadian dollar exchange rate during the year on US
dollar cash balances and US dollar payables.
26
MANAGEMENT’S DISCUSSION & ANALYSIS
EQUITY SHARE OF INCOME FROM JOINT VENTURES
On August 3, 2021, Denison completed the acquisition of 50% of JCU from UEX for cash consideration of $20,500,000
plus transaction costs of $1,356,000 (the ‘JCU Acquisition’). The JCU Acquisition occurred immediately following UEX’s
acquisition of all of the outstanding shares of JCU from OURD for cash consideration of $41,000,000.
Pursuant to Denison's agreement with UEX for the JCU Acquisition, Denison provided UEX with an interest-free 90-
day term loan of $40,950,000 (the ’Term Loan‘) to facilitate UEX's purchase of JCU from OURD. On the transfer of
50% of the shares in JCU from UEX to Denison, $20,500,000 of the amount drawn under the Term Loan was deemed
repaid by UEX. UEX repaid the remainder of the Term Loan in September 2021.
JCU is a private company that holds a portfolio of twelve uranium project joint venture interests in Canada, including a
10% interest in Denison’s 90% owned Wheeler River project, a 30.099% interest in the Millennium project (Cameco
Corporation, 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada, 66.1877%), and a 34.4508%
interest in the Christie Lake Project (UEX, 65.5492%). At December 31, 2021, Denison holds a 50% interest in JCU
and shares joint control. Accordingly, this joint venture is accounted for using the equity method.
During the period from the acquisition date to December 31, 2021, the Company recorded its equity share of loss from
JCU of $464,000 (December 31, 2020 - $nil). The Company records its share of income or loss from joint ventures one
month in arrears, based on the most available financial information, adjusted for any subsequent material transactions
that have occurred.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $63,998,000 at December 31, 2021 (December 31, 2020 – $24,992,000).
The increase in cash and cash equivalents of $39,006,000 was predominantly due to net cash provided by financing
activities of $159,817,000, offset by net cash used in operations of $21,245,000, and net cash used in investing
activities of $99,004,000.
Net cash used in operating activities of $21,245,000 was predominantly due to net income for the period, which was
more than offset by adjustments for non-cash items, including fair value adjustments.
Net cash used in investing activities of $99,004,000 consists primarily of expenditures to fund the purchase of uranium
investments, the acquisition of 50% of JCU, and the acquisition of property, plant and equipment, offset by the proceeds
from the sale of the common shares of GoviEx and the GoviEx Warrants.
Net cash provided by financing activities of $159,817,000 was predominantly due to the net proceeds from the
Company’s multiple equity financings during the year (as described below), as well as stock option exercises.
On June 2, 2020, the Company filed a short form base shelf prospectus (‘2020 Base Shelf Prospectus’) with the
securities regulatory authorities in each of the provinces and territories in Canada and in the United States. The 2020
Base Shelf Prospectus relates to the public offering for sale of securities, in amounts, at prices, and on terms to be
determined based on market conditions at the time of sale and as set forth in the 2020 Base Shelf Prospectus and
pursuant to a prospectus supplement, for an aggregate offering amount of up to $175,000,000 during the 25 month
period beginning on June 2, 2020.
In November 2020, Denison entered into an equity distribution agreement providing for an ATM equity offering program,
qualified by a prospectus supplement to the 2020 Base Shelf Prospectus (‘2020 ATM Program’). The 2020 ATM
Program was to allow Denison, through its agents, to, from time to time, offer and sell, in Canada and the United States,
such number of common shares as would have an aggregate offering price of up to US$20,000,000. In January and
February 2021, Denison issued 4,230,186 common shares under the 2020 ATM program, at an average price of $0.93
per share, for aggregate gross proceeds of $3,914,000, and incurred issue expenses of $466,000, including
commissions of $78,000. The 2020 ATM program was terminated in connection with the March 2021 unit offering
(described below).
In February 2021, Denison issued 31,593,950 units, pursuant to a public offering of units qualified by a prospectus
supplement to the 2020 Base Shelf Prospectus. The units were issued at a price of US$0.91 for gross proceeds of
$36,265,000 (US$28,750,000) and consisted of one common share and one half warrant. Each full warrant entitles the
holder to acquire one common share of the Company at an exercise price of US$2.00 over a 24 month period.
27
MANAGEMENT’S DISCUSSION & ANALYSIS
In March 2021, Denison issued 78,430,000 units of the Company pursuant to a public offering of units qualified by a
prospectus supplement to the 2020 Base Shelf Prospectus. The units were issued at a price of US$1.10 for gross
proceeds of $107,949,000 (US$86,273,000) and consisted of one common share and one half warrant. Each full
warrant entitles the holder to acquire one common share of the Company at an exercise price of US$2.25 over a 24
month period. In connection with this offering, the Company neared the aggregate offering amount qualified by the
2020 Base Shelf Prospectus, as a result of which it terminated the 2020 ATM Program.
In March 2021, Denison completed a private placement of 5,926,000 common shares on a flow-through basis at a price
of $1.35 for gross proceeds of $8,000,000.
Also during the year ended December 31, 2021, the Company received share issue proceeds of $6,300,000 related to
the issuance of 8,451,848 shares upon the exercise of employee stock options.
On September 16, 2021, the Company filed a short form base shelf prospectus (‘2021 Base Shelf Prospectus’) with
the securities regulatory authorities in each of the provinces and territories in Canada and in the United States. The
2021 Base Shelf Prospectus relates to the public offering for sale of securities, in amounts, at prices, and on terms to
be determined based on market conditions at the time of sale and as set forth in the 2021 Shelf Prospectus and pursuant
to a prospectus supplement, for an aggregate offering amount of up to $250,000,000 during the 25 month period
beginning on September 16, 2021.
In September 2021, Denison entered into an equity distribution agreement providing for an ATM equity offering program
(‘2021 ATM Program’), qualified by a prospectus supplement to the 2021 Base Shelf Prospectus. The 2021 ATM
Program will allow Denison, through its agents, to, from time to time, offer and sell, in Canada and the United States,
such number of common shares as would have an aggregate offering price of up to US$50,000,000. During 2021, the
Company issued 3,840,000 shares under the 2021 ATM program. The common shares were issued at an average
price of $2.08 per share for aggregate gross proceeds of $7,975,000. The Company also recognized issue costs of
$748,000 related to its ATM share issuances which includes $160,000 of commissions and $588,000 associated with
the set-up of the 2021 Shelf Prospectus and 2021 ATM Program.
Use of Proceeds
2020 Flow Through Financing
As at December 31, 2021, the Company has fulfilled its obligation to spend $930,000 on eligible Canadian exploration
expenditures as a result of the issuance of common shares on a flow-through basis in December 2020.
2020 ATM Program Financing
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus dated November 13, 2020
(‘November 2020 Prospectus Supplement’), the net proceeds raised under the 2020 ATM Program were expected,
subject to the actual amount raised, to be utilized to potentially fund Wheeler River evaluation and detailed project
engineering, as well as general, corporate and administrative expenses. The 2020 ATM Program was terminated prior
to raising the maximum net proceeds qualified by the November 2020 Prospectus Supplement, and the net proceeds
of this financing were fully allocated to general, corporate and administrative expenses.
October 2020 Equity Financing
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus dated October 8, 2020
(‘October 2020 Prospectus Supplement’), the net proceeds of the equity financing from October 2020 were expected
to be utilized to fund Wheeler River evaluation and EA activities as well as general, corporate and administrative
expenses. During the period from the closing of the financing in October 2020 and December 31, 2021, the Company’s
use of proceeds from this offering was in line with that disclosed in the October 2020 Prospectus Supplement.
February 2021 Unit Financing
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus dated February 16, 2021
(‘February 2021 Prospectus Supplement’), the net proceeds of the equity financing from February 2021 were expected
to be utilized to fund Wheeler River evaluation and detailed project engineering activities as well as general, corporate
and administrative expenses. During the period between the close of the financing in February 2021 and December 31
2021, a portion of the proceeds of this financing was utilized to fund Denison’s acquisition of 50% of JCU.
28
MANAGEMENT’S DISCUSSION & ANALYSIS
March 2021 Unit Financing
As disclosed in the Company’s prospectus supplement to the 2020 Base Shelf Prospectus dated March 17, 2021
(‘March 2021 Prospectus Supplement’), the majority of the net proceeds of the equity financing from March 2021 were
expected to be utilized to purchase physical uranium in the uranium spot market, with a target of acquiring
approximately 2,500,000 pounds of U3O8, as well as general, corporate and administrative expenses, including storage
costs for the purchased uranium. During the period between the close of the financing in March 2021 and December
31, 2021, the Company’s use of proceeds has been in line with that disclosed in the March 2021 Prospectus
Supplement. As at December 31, 2021, the Company completed the purchase of 2,500,000 pounds of U3O8 at a
weighted average price of $36.67 (US$29.66) per pound U3O8.
2021 Flow Through Financing
As at December 31, 2021, the Company has spent $2,283,000 towards its obligation to spend $8,000,000 on eligible
Canadian exploration expenditures as a result of the issuance of common shares on a flow-through basis in March
2021.
2021 ATM Program Financing
As disclosed in the Company’s prospectus supplement to the 2021 Base Shelf Prospectus dated September 28, 2021
(‘September 2021 Prospectus Supplement’), the net proceeds raised under the 2021 ATM Program were expected
subject to the actual amount raised, to be utilized to potentially fund Wheeler River evaluation and detailed project
engineering, long lead project construction items, as well as general, corporate and administrative expenses. During
the period from the closing of the financing in September 2021 and December 31, 2021, the Company’s use of proceeds
from this offering was in line with that disclosed in the September 2021 Prospectus Supplement.
Revolving Term Credit Facility
On January 21, 2022, the Company entered into an agreement with the Bank of Nova Scotia (‘BNS’) to extend the
maturity date of the Company’s credit facility to January 31, 2023 (‘2022 Credit Facility’). Under the 2022 Credit Facility,
the Company continues to have access to letters of credit of up to $24,000,000, which is fully utilized for non-financial
letters of credit in support of reclamation obligations. All other terms of the 2022 Credit Facility (tangible net worth
covenant, pledged cash, investments amount and security for the facility) remain unchanged by the amendment –
including a requirement to provide $9,000,000 in cash collateral on deposit with BNS to maintain the current letters of
credit issued under the 2022 Credit Facility. See SUBSEQUENT EVENTS below.
Contractual Obligations and Contingencies
The Company has the following contractual obligations at December 31, 2021:
(in thousands)
Accounts payable and accrued
liabilities
Lease liabilities
Debt obligations
Total
1 Year
2-3 Years
4-5 Years
$
$
$
8,590
521
60
9,171 $
8,590
162
17
8,769
$
$
$
-
252
32
284 $
$
-
107
11
118 $
After
5 Years
-
-
-
-
Exploration Spending Required to Maintain Exploration Portfolio in Good Standing
The Company has a portfolio of mineral properties, predominantly composed of 211 mineral claims in the Athabasca
Basin region of Saskatchewan, Canada as at December 31, 2021. Under The Mineral Tenure Registry Regulations in
Saskatchewan, once a claim has been ‘staked’, it may be held for an initial two-year period, and this period may be
renewed year to year, subject to the holder expending a minimum required amount on exploration on the claim lands.
Exploration expenditures that exceed the annual spending requirements may be carried forward and applied against
future spending requirements. In addition, the Company, has mine surface lease payment obligations through its
ownership interest in the MLJV and MWJV.
29
In order to maintain the Company’s current exploration portfolio in good standing for a period of five years, the
Company’s share of the required exploration expenditures is outlined in the table below.
MANAGEMENT’S DISCUSSION & ANALYSIS
(in thousands)
Exploration expenditures
required to maintain claim
status
Surface lease payments
Total
1 Year
2 Year
3 Year
4-5 Years
$
$
$
4,938
1,370
6,308 $
44
274
318
$
$
$
653
274
927 $
$
1,200
274
1,474 $
3,041
548
3,589
The Company routinely assesses its exploration portfolio in order to rank properties in accordance with their exploration
potential. From time to time, strategic decisions are made to either acquire new claims, through staking or purchase,
or to allow claims to lapse. Claims are allowed to lapse if the Company determines that no further exploration work is
warranted by the Company. The amounts in the table above were calculated based on currently approved legislation
and assumes that the land claims held at the date of the MD&A would be maintained for the duration of five years. In
addition, where Denison holds a claim with a partner, the Company has assumed that each partner will fund their share
of the required expenditures.
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, 2021, is estimated to
be $37,532,000, which is the present value amount that 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 2021, an adjustment of $585,000
was made to decrease the reclamation liability to reflect minor adjustments in future plans as well as changes in the
long-term discount rate used to arrive at 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 the Elliot Lake
reclamation trust fund. At December 31, 2021, the amount of restricted cash and investments relating to the Elliot Lake
reclamation trust fund was $2,866,000.
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. The most recent
approved reclamation plan is dated March 2016 and the Company’s best estimate of its share of the present value of
the total reclamation liability is derived from this plan. In the fourth quarter of 2021, the Company decreased the liability
by $2,056,000 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 2038 and 2056.
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. Under the March 2016 approved plan, the
Company has put in place financial assurances of $24,135,000, providing irrevocable standby letters of credit from
BNS in favour of Saskatchewan’s Ministry of Environment. As at December 31, 2021, to provide the required standby
letters of credit, the Company is utilizing the full capacity of the 2021 Credit Facility and has committed an additional
$135,000 with BNS as restricted cash collateral.
Subsequent to year end, an updated reclamation plan for McClean Lake and Midwest was approved by the CNSC.
See SUBSEQUENT EVENTS below.
Other – The Company’s exploration and evaluation activities are subject to environmental regulations as set out by the
Saskatchewan government. Cost estimates of expected future decommissioning and reclamation activities are
recognized when the liability is incurred. In 2021, the Company recorded a reclamation obligation of $1,228,000, which
represents the Company’s best estimate of the present value of the future reclamation cost contemplated in these cost
estimates.
30
FINANCIAL INSTRUMENTS AND INVESTMENTS
MANAGEMENT’S DISCUSSION & ANALYSIS
Financial
Instrument
Category (1)
Fair
Value
December 31,
2021
December 31,
2020
Hierarchy
Fair Value
Fair Value
(in thousands)
Financial Assets:
Cash and equivalents
Trade and other receivables
Investments
Equity instruments (shares)
Equity instruments (warrants)
Restricted cash and equivalents
Category B
Category B
Category A
Category A
Level 1
Level 2
Elliot Lake reclamation trust fund
Credit facility pledged assets
Reclamation letter of credit collateral
Category B
Category B
Category B
Financial Liabilities:
Account payable and accrued liabilities
Debt obligations
Warrants on investment
Share purchase warrants
Category C
Category C
Category A
Category A
Level 2
Level 2
$
$
$
63,998 $
3,656
14,349
229
2,866
9,000
135
94,233 $
8,590
508
1,625
20,337
31,060 $
24,992
3,374
16,657
293
2,883
9,000
135
57,334
7,178
615
-
-
7,793
Notes:
1.
Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category
B=Financial assets at amortized cost; Category C=Financial liabilities at amortized cost.
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 commodity price risk, currency risk, equity price risk, credit risk, interest rate risk
and liquidity risk.
Commodity Price Risk
The Company’s investments in uranium are recorded at fair value, with changes in fair value being recorded in the
profit or loss. At December 31, 2021, a 10% increase in the uranium spot price would increase the value of the
Company’s investments by $13,311,000, while a 10% decrease would decrease the value of the investments by
$13,311,000.
Currency Risk
Changes in the value of the Canadian dollar compared to foreign currencies will affect the value, as reported, of the
Company’s foreign denominated investments in uranium, cash and cash equivalents, trade and other receivables, and
trade and other payables.
As the prices of uranium are quoted in U.S. currency, fluctuations in the Canadian dollar relative to the U.S. dollar can
significantly impact the valuation of the Company’s holdings of physical uranium from a Canadian dollar perspective.
At December 31, 2021, the Company is exposed to some foreign exchange risk on its net U.S dollar financial asset
position, including cash and cash equivalents held in U.S. dollars, predominantly as a result of U.S dollar financing
activities completed during 2021.
At December 31, 2021, the Company’s net U.S dollar financial assets and uranium investments were $8,697,000, and
$133,114,000, respectively. The impact of the U.S dollar strengthening or weakening (by 10%) on the value of the
Company’s net U.S dollar-denominated assets is as follows:
31
(in thousands except foreign exchange rates)
Rate
Rate
(loss)
MANAGEMENT’S DISCUSSION & ANALYSIS
December 31
2021
Foreign
Exchange
Sensitivity
Foreign
Change in
Exchange net income
Currency risk
CAD weakens
CAD strengthens
Equity Price Risk
1.2678
1.2678
1.3945
1.1410
14,181
(14,181)
The Company is exposed to equity price risk on its investments in equity instruments of other publicly traded companies
as well as on the GoviEx Warrants. At December 31, 2021, a 10% increase in the equity price of all of the Company’s
equity holdings would have increased the Company’s investments in equity instruments by $1,472,000 and increased
the GoviEx Warrant liability by $423,000. A 10% decrease would have decreased the investments in equity instruments
by $1,470,000 and decreased the GoviEx Warrant liability by $390,000.
Credit Risk
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 cash equivalents, and restricted cash and cash 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 considered credit worthy and with whom the Company has established a relationship through its past dealings.
Interest Rate Risk
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.
Liquidity Risk
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 cash equivalents, debt instruments and equity
investments and its access to credit facilities and capital markets, if required.
TRANSACTIONS WITH RELATED PARTIES
Uranium Participation Corporation
UPC was a publicly-listed investment holding company which invested substantially all of its assets in U3O8 and UF6.
The Company had no ownership interest in UPC but received fees for management services it provided and
commissions from the purchase and sale of U3O8 and UF6 by UPC.
The MSA between the Company and UPC entitled Denison to receive the following management fees from UPC: a) a
base fee of $400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per annum
of UPC’s total assets in excess of $100 million and up to and including $500 million, and (ii) 0.2% per annum of UPC’s
total assets in excess of $500 million; c) a fee, at the discretion of the Board, for on-going monitoring or work associated
with a transaction or arrangement (other than a financing, or the acquisition of or sale of U3O8 or UF6); and d) a
commission of 1.0% of the gross value of any purchases or sales of U3O8 or UF6 or gross interest fees payable to UPC
in connection with any uranium loan arrangements.
On July 19, 2021, UPC and Sprott completed the UPC Transaction and the MSA between Denison and UPC was
terminated in accordance with the termination provisions therein. As a result, Denison received a termination payment
from UPC of $5,848,000.
32
The following amounts were earned from UPC for the periods ended:
(in thousands)
Management Fee Revenue
Base and variable fees
Termination fee
Discretionary fees
Commission fees
MANAGEMENT’S DISCUSSION & ANALYSIS
Year Ended
Year Ended
December 31, December 31,
2021
2020
$
$
1,069
5,848
350
697
7,964
$
$
2,011
-
300
293
2,604
At December 31, 2021, accounts receivable includes $nil (December 31, 2020 – $265,000) due from UPC with respect
to the fees and transactions discussed above.
Korea Electric Power Corporation (‘KEPCO’)
To the knowledge of the Company, as at December 31, 2021, KEPCO, through its subsidiaries including KHNP Canada
Energy Ltd. (‘KHNP’), holds 58,284,000 shares of Denison representing a share interest of approximately 7.17%, and
is also the largest member of the consortium of investors that make up the Korea Waterbury Lake Uranium Limited
Partnership (‘KWULP’). The Waterbury Lake property is owned by Denison and KWULP through their respective
interests in Waterbury Lake Uranium Corporation (‘WLUC’) and Waterbury Lake Uranium Limited Partnership
(‘WLULP’), entities whose key asset is the Waterbury Lake Property.
Other
During the year ended December 31, 2021, the Company incurred investor relations, administrative service fees and
certain pass-through expenses of $164,000 (December 31, 2020 – $206,000) with Namdo Management Services Ltd
(‘Namdo’), a company of which a former director of Denison is a shareholder. These services were incurred in the
normal course of operating a public company. All services and transactions with Namdo were made on terms equivalent
to those that prevail with arm’s length transactions. As at December 31, 2021, Namdo is no longer a related party of
Denison and there are no amounts due to Namdo at period end owing to any related party transactions.
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
OFF-BALANCE SHEET ARRANGEMENTS
The Company does not have any off-balance sheet arrangements.
Year Ended
December 31,
2021
Year Ended
December 31,
2020
$
$
2,546
2,277
4,823
$
$
1,899
1,507
3,406
33
MANAGEMENT’S DISCUSSION & ANALYSIS
SUBSEQUENT EVENTS
Tailings Management Facility Expansion and Updated Reclamation Plan Approved for McClean Lake and
Midwest Operations
In January 2022, the Canadian Nuclear Safety Commission approved an amendment to the operating license for the
MLJV and MWJV operations, which allows for the expansion of the McClean Lake Tailings Management Facility
(‘TMF’), along with the associated revised Preliminary Decommissioning Plan (‘PDP’) and cost estimate. As a result of
this updated plan, the Company’s pro rata share of the financial assurances required to be provided to the Province of
Saskatchewan has decreased from $24,135,000 to $22,972,000. This is expected to result in a decrease in the pledged
amount required under the 2022 Facility to $7,972,000, and the full release of the Company’s additional cash collateral
of $135,000. The Company’s reclamation obligation related to the MLJV is also expected to decrease.
Mongolia Mining Division Sale – Repayment Schedule Agreement with Uranium Industry a.s
In January 2022, the Company executed a Repayment Schedule Agreement (the ‘Repayment Agreement’) pursuant
to which the parties negotiated the repayment of the debt owing from UI to Denison. In accordance with the Repayment
Agreement, the Company has received an initial US$2 million debt repayment instalment in January 2022.
Under the terms of the Repayment Agreement, UI has agreed to make scheduled payments on account of the
Arbitration Award, plus additional interest and fees, through a series of quarterly installments and annual milestone
payments, until December 31, 2025. The total amount due to Denison under the Repayment Agreement, including the
initial US$2 million already received, is approximately US$16 million. The Repayment Agreement includes customary
covenants and conditions in favour of Denison, including certain restrictions on UI’s ability to take on additional debt, in
consideration for Denison’s deferral of enforcement of the Arbitration Award while UI is in compliance with its obligations
under the Repayment Agreement.
Bank of Nova Scotia Credit Facility Renewal
In January 2022, the Company entered into an amending agreement with BNS to extend the maturity date of the 2021
Facility. Under the facility amendment, the maturity date has been extended to January 31, 2023 (the “2022 Facility”).
All other terms of the 2022 Facility (tangible net worth, pledged cash, investment amounts and security for the facility)
remain unchanged from those of the 2021 Facility, and the Company continues to have access to credit up to
$24,000,000 the use of which is restricted to non-financial letters of credit in support of reclamation obligations.
The 2022 Facility remains subject to letter of credit and standby fees of 2.40% (0.40% on the $9,000,000 covered by
pledged cash collateral) and 0.75% respectively.
Changes to Composition of the Board of Directors
In January 2022, Ms. Laurie Sterritt was appointed to Denison’s Board of Directors. Ms. Sterritt, Partner at Leaders
International, has over 25 years of experience in the fields of Indigenous, government, and community relations.
In February 2022, Mr. Yun Chang Jeong joined the Board of Directors. Mr. Jeong, General Manager of the Nuclear
Fuel Supply Section of KHNP, was nominated by KHNP pursuant to the KHNP Strategic Relationship Agreement
(‘KHNP SRA'), to fill the vacancy on the Board created by the February 2022 resignation of Mr. Jun Gon Kim.
OUTSTANDING SHARE DATA
Common Shares
At March 3, 2022, there were 814,739,441 common shares issued and outstanding and a total of 885,889,570 common
shares on a fully-diluted basis.
Stock Options and Share Units
At March 3, 2022, there were 8,949,895 stock options, and 7,193,759 share units outstanding.
34
MANAGEMENT’S DISCUSSION & ANALYSIS
Share Purchase Warrants
At March 3, 2022, there were 55,006,475 share purchase warrants outstanding, including 15,791,475 share purchase
warrants with a US$2.00 strike price and a February 2023 expiry, and 39,215,000 share purchase warrants with a
US$2.25 strike price and a March 2023 expiry.
OUTLOOK FOR 2022
The 2022 Outlook, and discussion below, represents the Company’s best estimate of its cash flows for the year:
(‘000)
Mining Segment
Mineral Sales
Development & Operations
Exploration
Evaluation
JCU Cash Contributions
Closed Mines Services Segment
Closed Mines Environmental Services
Corporate and Other Segment
Corporate Administration & Other
Net forecasted cash outflow (1)
Notes:
1. Only material operations shown.
2. The outlook is prepared on a cash basis.
MINERAL SALES
2022 OUTLOOK(2)
$ 2,044
(1,704)
(7,213)
(20,356)
(713)
(27,942)
1,185
1,185
(9,477)
(9,477)
$
(36,234)
During 2022, Denison plans to sell the uranium production that it received from the MLJV as a result of the SABRE test
mining program that took place in 2021. Uranium sales are estimated to generate, net of selling costs, approximately
$2.0 million.
DEVELOPMENT & OPERATIONS
In 2022, Denison’s share of operating and capital expenditures at the Orano Canada operated MLJV and Midwest joint
ventures (‘MWJV’) are budgeted to be $684,000. Most of these expenditures relate to McClean Lake – including the
MLJV’s share of the cost of operating for the Sue water treatment plant and planned work to further advance the MLJV’s
SABRE mining method.
The successful completion of the 2021 SABRE mining test represented a significant milestone for the SABRE
technology. Importantly, during the test, the SABRE mining method was used to successfully produce 1,500 tonnes of
high-value ore from the mining of the McClean North deposit. Based on this positive result, the MLJV partners (Orano
Canada and Denison) plan to evaluate the technical and economic merit of the potential use of SABRE at their jointly
owned McClean Lake and Midwest properties in 2022. Denison’s share of planned SABRE expenses for 2022 is
estimated to be $316,000.
Additionally, the MWJV has approved a small budget to carry out an internal evaluation of the potential use of the ISR
mining method at the Midwest Main and Midwest A deposits.
Operating expenditures in 2022 are also expected to include $900,000 for reclamation costs related to Denison’s legacy
mine sites in Elliot Lake.
35
MANAGEMENT’S DISCUSSION & ANALYSIS
EXPLORATION
The exploration budget for 2022 is estimated at $7.2 million (Denison’s share).
As Denison continues to advance the application of ISR mining at Phoenix, exploration efforts remain focused on
discovering high-grade unconformity-hosted uranium deposits with ISR potential. The application of ISR in the
Athabasca Basin has the potential to make smaller high-grade deposits economically viable, which has influenced new
exploration strategies, particularly within highly prospective areas with widely spaced historical drilling.
Denison-operated exploration programs planned for 2022 have been designed to focus on the following objectives:
1) Drill high-priority exploration targets in proximity to planned Wheeler River infrastructure. Significant effort will be
spent evaluating exploration target areas with the potential to discover either (i) an ISR-amenable deposit that
could be brought into production as a satellite operation to the planned Phoenix ISR processing plant, or (ii) a
basement-hosted deposit proximal to Gryphon that could enhance the development economics for a future
underground mining operation. To this end, the planned exploration program for Wheeler River includes
approximately 6,700 metres in diamond drilling, and is expected to focus primarily on the M Zone and Gryphon
South target areas.
2)
Advance pipeline projects with the potential for significant new discoveries.
Following the completion of the 2021 geophysical program at Ford Lake, a drill program of approximately 8 to 10
drill holes (approximately 3,500 metres), is planned for 2022 to test conductor picks identified from the 2021 survey.
In addition, a large geophysical program is proposed for 2022 to advance several highly prospective projects to a
drill-ready stage for 2023 and 2024. Project-scale airborne surveys are proposed for the Johnston Lake, Candle
Lake, and Darby projects, while ground EM surveys are planned for portions of the Johnston Lake, Darby, Moon
Lake, Moon Lake South, Crawford Lake, and Waterbury Lake projects. In addition, resistivity surveying is planned
for Crawford Lake.
Exploration activities in 2022 will also include non-operated programs at McClean Lake (22.5% Denison; diamond
drilling planned for Q1), Midwest (25.17% Denison; geophysics planned for Q1), and Waterfound River (11.78%
Denison, 26.98% JCU; diamond drilling planned for Q1 and Q3, plus geophysics for Q1). Orano Canada is the
operator of all three projects.
EVALUATION
The 2022 budget reflects an ambitious program designed to further de-risk the technical elements of the Phoenix ISR
project ahead of the completion of the FS initiated for the project in late 2021. Activities planned for 2022 include: (1)
completing additional field programs, including the completion of the in-ground FFT, which is expected to represent a
key milestone in confirming technical feasibility of the project, (2) advancing the completion of an independent FS, to
be prepared by Wood PLC in accordance with NI 43-101, (3) completing various environmental assessment scopes
and submitting a draft EIS, as applicable, to certain interested parties (for advanced review) and regulators; (4) initiating
activities required to license and permit the construction of the proposed Phoenix ISR mining operations; and (5)
advancing Impact Benefit Agreement (‘IBA’) negotiations with interested parties.
The budget for Denison’s share of evaluation programs and technical services departmental net spending, including
capital items and recoveries from operator fees, is approximately $20.4 million (excluding Denison’s share attributable
to its ownership interest in JCU, discussed below). Total 2022 Wheeler River evaluation expenditures, including JCU’s
share of expenses, is projected to be approximately $23.9 million.
JCU CASH CONTRIBUTIONS
The budget for 2022 includes cash contributions to JCU of $0.7M, In 2022, JCU is anticipating funding its share of
project expenditures at Millennium, Kiggavik, Waterfound River, Wheeler River, and Christie Lake. However, due to
JCU’s existing cash balance, JCU does not anticipate requiring additional funding from its shareholders until the third
quarter of 2022.
CLOSED MINES
Revenue from operations at Denison’s Closed Mines group during 2022 is budgeted to be $7.2 million, with operating,
overhead, and capital expenditures budgeted to be $6.0 million, resulting in an expected net contribution of approximately
$1.2 million.
36
MANAGEMENT’S DISCUSSION & ANALYSIS
CORPORATE ADMINISTRATION AND OTHER
Cash corporate administration expenses are budgeted to be $7.5 million in 2022, 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.
The corporate administration and other budget includes cash inflows of $2.4 million related to the first payment received
under the Repayment Agreement with UI in January 2022. A further $3.5 million in payments are due to be received
over the balance of 2022, but have not been reflected in the budget for 2022 outlined above.
Also included in the budget for 2022 is $4.1M in capital additions, predominantly associated with the purchase and
renovation of the Company’s newly acquired office building in Saskatoon.
In addition to Corporate administration expenses in 2022, letter of credit and standby fees relating to the 2022 Credit
Facility are expected to be approximately $0.4 million and uranium storage fees are expected to be $0.1 million. These
amounts are expected to be partly offset by estimated interest income of $0.2 million on the Company’s unrestricted and
restricted cash and short-term investments, for a net cash outflow of $0.3 million.
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 Executive Vice-President 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 Executive Vice-President and Chief Financial Officer concluded that the
Company’s disclosure controls and procedures are effective as of December 31, 2021.
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, 2021.
There has not been any change in the Company’s internal control over financial reporting that occurred during 2021
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 these financial statements,
actual results may be materially different.
Significant estimates and judgements made by management relate to:
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.
37
MANAGEMENT’S DISCUSSION & ANALYSIS
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.
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 or 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.
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.
Reclamation obligations
Asset retirement obligations are recorded as a liability when the asset is initially constructed or a constructive or legal
obligation exists. The valuation of the liability typically involves 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.
RISK FACTORS
Denison’s business, the value of its common shares (the ‘Shares’) and management’s expectations regarding the same
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 than anticipated. The following information
pertains to the outlook and conditions currently known to Denison that could have a material impact on the financial
condition of the Company. Other factors may arise in the future that are currently not foreseen by management of the
Company, which may present additional risks in the future. Current and prospective security holders of Denison should
carefully consider these risk factors.
Capital Intensive Industry and Uncertainty of Funding
The exploration and development of mineral properties and operation of mines and associated facilities requires a
substantial amount of capital, and the ability of the Company to proceed with any of its plans with respect thereto
depends on its ability to obtain financing through joint ventures, equity financing, debt financing or other means. The
Company intends to use the proceeds from its prior equity offerings as described in the applicable prospectus or other
public disclosure for such offering; however, the Company’s ability to achieve such plans and objectives could change
38
MANAGEMENT’S DISCUSSION & ANALYSIS
as a result of a number of internal and external factors. The Company’s ultimate use of its available funds might vary
substantially from its planned use of proceeds. There is no assurance that the proceeds from such prior offerings will
be sufficient to meet Denison’s business objectives.
To fund additional activities, including certain exploration, evaluation and development activities, the Company
anticipates it will require additional financing. 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 the financing necessary to fund the substantial capital that is typically required in order to advance a mineral
project, such as the Wheeler River project, through the testing, permitting and feasibility processes to a production
decision, or to place a property, such as the Wheeler River project, into commercial production. Similarly, there is
uncertainty regarding the Company’s ability to fund additional exploration or development of the Company’s projects
or the acquisition of new projects.
There is no assurance that the Company will be successful in generating and/or obtaining required financing as and
when needed on acceptable terms, and failure to obtain such additional financing could result in the delay or indefinite
postponement of any or all of the Company’s exploration, development or other growth initiatives.
COVID-19 Outbreaks
Outbreaks of COVID-19 have caused, and may cause further, disruptions to the Company’s business and operational
plans. Such disruptions may result from (i) restrictions that governments and communities impose to address the
COVID-19 outbreak, (ii) restrictions that the Company and its contractors and subcontractors impose to ensure the
safety of employees and others, (iii) shortages of employees and/or unavailability of contractors and subcontractors,
and/or (iv) interruption of supplies from third parties upon which the Company relies. It is presently not possible to
predict the extent or duration of any such disruption. A disruption may have a material adverse effect on the Company’s
business, financial condition, and results of operations, which could be rapid and unexpected. These disruptions may
severely impact the Company’s ability to carry out its business plans for 2022 and beyond.
Global Financial Conditions
Global financial conditions are subject to volatility arising from international geopolitical developments and global
economic phenomenon, as well as general financial market turbulence, and market expectations of the same.
Examples of such are the broad market impacts observed in connection with the COVID-19 pandemic, including market
volatility and global inflation. Access to public financing and credit in Canada can be negatively impacted by global
financial conditions. Accordingly, the health of the global financial 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.
Instances of volatility and market turmoil could adversely impact Denison's operations and the trading price of the
Shares.
Speculative Nature of Exploration and Development
Exploration for minerals and the development of mineral properties is speculative and involves significant uncertainties
and financial risks that even a combination of careful evaluation, experience, and technical knowledge may not
eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored
prove to return the discovery of a commercially mineable deposit and/or are ultimately developed into producing mines.
As at the date hereof, many of Denison’s projects are preliminary in nature and mineral resource estimates 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. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Major expenses may be required to properly evaluate the prospectivity
of an exploration property, to estimate mineral resources, establish mineral reserves and ultimately develop an orebody.
There is no assurance that the Company’s uranium deposits are commercially mineable.
Imprecision of Mineral Reserve and Mineral Resource Estimates
Mineral reserve and resource figures are estimates, and no assurances can be given that the estimated quantities of
uranium are in the ground and could be produced or that Denison will receive the prices assumed in determining its
mineral reserves. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of
drilling results and industry best practices. Valid estimates made at a given time may significantly change when new
information becomes available. While Denison believes that the Company’s estimates of mineral reserves and mineral
resources 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 and geological interpretations,
which may ultimately prove inaccurate. Furthermore, market price fluctuations, as well as increased capital or
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MANAGEMENT’S DISCUSSION & ANALYSIS
production costs or reduced recovery rates, may render mineral reserves and resources 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.
Risks of, and Market Impacts on, Developing Mineral Properties
Denison’s uranium production is dependent in part on the successful development of its known ore bodies, discovery
of new ore bodies and/or revival of previously existing mining operations. It is impossible to ensure that Denison’s
current exploration and development programs will result in profitable commercial mining operations. Where the
Company has been able to estimate the existence of mineral resources and mineral reserves, such as for the Wheeler
River project, substantial expenditures are still required to establish economic feasibility for commercial development
and to obtain the required environmental approvals, permits and assets needed to commence commercial operations.
Development projects are subject to the completion of successful feasibility studies, engineering studies and
environmental assessments, the issuance of necessary governmental permits and the availability of adequate
financing, the completion or attainment of which are subject to their own risks and uncertainties. Additionally, the
inability to achieve necessary tasks or obtain required inputs, or any delays in the achievement of any one or more key
project tasks or inputs, could cause significant delays in timing, cost or results of the assessment of feasibility and/or
the process to advance a project to a development decision. 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; political and economic
climate; and uranium prices, which are historically volatile and cyclical.
Where a feasibility study is completed by Denison, such as is in progress for the Wheeler River project, any estimates
of mineral reserves and mineral resources, development costs and schedule, operating costs and estimates of future
cash flow contained therein, will be based on Denison’s interpretation of the information available to-date. Development
projects have no operating history upon which to base developmental and operational estimates. Particularly for
development projects, economic analyses and feasibility studies contain estimates based upon many factors, including
estimates of mineral reserves, the interpretation of geologic and engineering data, anticipated tonnage and grades of
ore to be mined and processed, the configuration of the ore body, expected recovery rates of uranium from the ore,
estimated operating costs, anticipated climatic conditions and other factors. In addition, results from further studies
completed on the project may alter the plans and/or schedule for a project, which in turn may cause potentially
significant delays to previous estimates of schedule and/or increases in estimated costs. As a result, it is possible that
actual capital and operating costs and economic returns will differ significantly from those estimated for a project prior
to production. For example, the plan and schedule, the capital and operating cost projections, and the related economic
indicators in the Wheeler PFS Report may vary significantly from the capital and operating costs and economic returns
estimated by a final feasibility study or actual expenditures.
The decision as to whether a property, such as Wheeler River, contains a commercial mineral deposit and should be
brought into production will depend upon market conditions, as well as the results of exploration and evaluation
programs and/or feasibility studies, and the recommendations of duly qualified engineers and/or geologists, all of which
involves significant expense and risk.
It is not unusual in the mining industry for new mining operations to take longer than originally anticipated to be brought
into a producing phase, and to require more capital than anticipated. Any of the following events, among others, could
affect the profitability or economic feasibility of a project or delay or stop its advancement: unavailability of necessary
capital, unexpected problems during the start-up phase delaying production, unanticipated changes in grade and
tonnes of ore to be mined and processed, unanticipated adverse geological conditions, unanticipated metallurgical
recovery problems, incorrect data on which engineering assumptions are made, unavailability of labour, increases in
operating costs (including due to inflation), increased costs of mining or processing and refining facilities, unavailability
of economic sources of power and water, unanticipated transportation costs, changes in government regulations
(including regulations with respect to the environment, prices, royalties, duties, taxes, permitting, restrictions on
production, quotas on exportation of minerals, etc.), changes or delays in permitting and regulatory approval processes
or restrictions associated with permitting or regulatory approvals, fluctuations in uranium prices, and accidents, labour
actions and force majeure events.
The ability to sell and profit from the sale of any eventual mineral production from a property will be subject to the
prevailing conditions in the applicable marketplace at the time of sale, and applicable government regulations. The
demand for uranium and other minerals is subject to global economic influences and changing attitudes of consumers
and demand from end-users. Many of these factors are beyond the control of a mining company and therefore represent
a significant risk which could impact the long-term viability of Denison and its operations.
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MANAGEMENT’S DISCUSSION & ANALYSIS
Denison has a History of Negative Operating Cash Flow
Denison had negative operating cash flow for recent past financial reporting periods. Denison anticipates that it will
continue to have negative operating cash flow until such time as, if at all, its Wheeler River project goes into production.
To the extent that Denison has negative operating cash flow in future periods, Denison may need to allocate a portion
of its cash reserves and/or physical uranium holdings to fund such negative cash flow. Denison may also be required
to raise additional funds through the issuance of equity or debt securities. There can be no assurance that additional
capital or other types of financing will be available when needed or that these financings will be on terms favourable to
Denison.
Risks Associated with the Selection of Novel Mining Methods
As disclosed in the Wheeler PFS Report, Denison has selected the ISR mining method for production at the Phoenix
deposit. While test work completed to date indicates that ground conditions and the mineral reserves estimated to be
contained within the deposit are amenable to extraction by way of ISR, actual conditions could be materially different
from those estimated based on the Company’s technical studies and field testing completed to-date. While industry
best practices have been utilized in the development of its estimates, actual results may differ significantly.
The MLJV is also developing the SABRE mining method, and Orano Canada and Denison plan to evaluate the potential
use of this innovative method for future mining operations at their jointly owned McClean Lake and Midwest properties.
While important milestones for the SABRE technology have been achieved to date, actual operations for a full-scale
mining operation have not been proven and could be materially different than currently projected or otherwise
anticipated.
Denison and the MLJV, respectively, must complete work to further advance and/or confirm its current estimates and
projections for development (including advancement to the level of a feasibility study, as applicable). As a result, it is
possible that actual costs and economic returns of any mining operations may differ materially from Denison’s or the
MLJV’s best estimates, as applicable.
If these novel mining methods can be advanced, their commercial use beyond the projects for or on which they are
being developed could present a significant opportunity for Denison and/or the MLJV to expand upon the benefits of
such investments in innovation; however, the ability and process for a joint venture, or either partner thereof, to use the
mining method on projects outside of their respective joint ventures has not yet been established.
Dependence on Obtaining Licenses, and other Regulatory 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 federal, provincial and state 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 is currently, and has historically, increased the costs of exploring, drilling, developing, constructing,
operating and closing Denison’s mines and processing facilities. It is possible that the costs, delays and other effects
associated with such laws and regulations may impact Denison’s decision with respect to exploration and development
properties, including 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 in accordance with applicable
environmental standards.
The development of mines and related facilities is contingent upon governmental approvals that are complex and time
consuming to obtain and which may involve the coordination of multiple governmental agencies. Environmental and
regulatory review has become a long, complex and uncertain process that can cause potentially significant delays.
Obtaining these government approvals includes among other things, completing environmental assessments and
engaging with local communities. See “Engagement with Canada’s First Nations and Métis” for more information
regarding Denison’s community engagement. In addition, 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.
The ability of the Company to obtain and maintain permits and approvals and to successfully explore and evaluate
properties and/or develop and operate mines may be adversely affected by real or perceived impacts associated with
its activities that affect the environment and human health and safety at its projects and in the surrounding communities.
The real or perceived impacts of the activities of other mining companies, locally or globally, may also adversely affect
the Company’s ability to obtain and maintain permits and approvals. The Company is uncertain as to whether all
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MANAGEMENT’S DISCUSSION & ANALYSIS
necessary permits will be obtained or renewed on acceptable terms or in a timely manner. Any significant delays in
obtaining or renewing such permits or licenses in the future could have a material adverse effect on Denison.
On March 20, 2020, Denison announced a temporary suspension of activities related to the EA for the Wheeler River
project, an important part of which, at that time, involved extensive in-person engagement and consultation with various
interested parties. Accordingly, the decision to suspend the EA was partially motivated by the significant social and
economic disruptions that emerged as a result of the COVID-19 pandemic. The EA process is a key element of the
Wheeler River project’s critical path. While the EA process has resumed, the Company is not currently able to estimate
the impact of the temporary suspension to the project development schedule, cost estimates or other project
development assumptions and projections outlined in the PFS, and users are specifically cautioned against relying on
the estimates provided therein regarding the start of pre-production activities in 2021 and first production in 2024.
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 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. While the Company has taken great care to ensure
full compliance with its legal obligations, there can be no assurance that the Company has been or will be in full
compliance with all of these laws and regulations, or with all permits and approvals that it is required to have.
Failure to comply with applicable laws, regulations and permitting requirements, even inadvertently, 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 may be required to compensate others who suffer loss or damage by
reason of their exploration or other activities and may have civil or criminal fines or penalties imposed for violations of
applicable laws or regulations.
Engagement with Canada’s First Nations and Métis
First Nations and Métis rights, entitlements and title claims 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 in northern Saskatchewan ceded title to most traditional lands but continue to assert title to the minerals
within the lands. Métis people have not signed treaties; they assert Aboriginal rights throughout Saskatchewan,
including Aboriginal title over most if not all of the Company’s project lands.
Managing relations with the local First Nations and Métis communities is a matter of paramount importance to Denison.
Engagement with, and consideration of other rights of, potentially affected Indigenous peoples may require
accommodations – including undertakings regarding funding, contracting, environmental practices, employment and
other matters and can be difficult. This may affect the timetable and costs of exploration, evaluation and development
of the Company’s projects.
The Company’s relationships with various communities of interest are critical to ensure the future success of its existing
operations and the construction and development of its projects. There is an increasing level of public concern relating
to the perceived effect of mining activities on the environment and communities. Adverse publicity relating to the mining
industry generated by non-governmental organizations and others could have an adverse effect on the Company’s
reputation or financial condition and may impact its relationship with the communities in proximity to which it operates.
While the Company is committed to operating in a socially responsible manner, there is no guarantee that the
Company’s efforts in this regard will mitigate this potential risk.
The inability of the Company to maintain positive relationships with communities of interest, including local First Nations
and Métis, may result in additional obstacles to permitting, increased legal challenges, or other disruptions to the
Company’s exploration, development and production plans, and could have a significant adverse impact on the
Company’s share price and financial condition.
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
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MANAGEMENT’S DISCUSSION & ANALYSIS
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 pursue its development plans is dependent upon receipt of, and
compliance with, additional permits, licenses and approvals. Failure to obtain such permits, licenses and approvals
and/or meet any conditions set forth therein 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 advance its projects
and, as a result, on its financial position and results.
Global Demand and International Trade Restrictions
The international nuclear fuel industry, including the supply of uranium concentrates, is relatively small compared to
other minerals, and is generally highly competitive and heavily regulated. 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. In addition, the international marketing of uranium is subject to governmental policies and
certain trade restrictions. For example, the supply and marketing of uranium from Russia is limited by international
trade agreements.
In general, trade agreements, governmental policies and/or trade restrictions are beyond the control of Denison and
may affect the supply of uranium available for use in markets like the United States and Europe, which are currently
the largest markets for uranium in the world. Similarly, trade restrictions or foreign policy have the potential to impact
the ability to supply uranium to developing markets, such as China and India. If substantial changes are made to
regulations affecting the global marketing and supply of uranium, the Company’s business, financial condition and
results of operations may be materially adversely affected.
Volatility and Sensitivity to Uranium Market Prices
The value of the Company’s mineral resources, mineral reserves and estimates of the viability of future production for
its projects are heavily influenced by long- and short term market prices of U3O8. Historically, these prices have seen
significant fluctuations, 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, economic and social 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. Uranium prices failing to reach
or sustain projected levels can impact operations by requiring a reassessment of the economic viability of the
Company’s projects, and such reassessment alone may cause substantial delays and/or interruptions in project
development, which could have a material adverse effect on the results of operations and financial condition of Denison.
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. Technical advancements in, and government subsidies for, 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. Sustained lower prices of alternate forms of energy may result in lower
demand for uranium concentrates.
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MANAGEMENT’S DISCUSSION & ANALYSIS
Current estimates project 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
The market price of Denison’s Shares may experience wide fluctuations which may not necessarily be related to the
financial condition, operating performance, underlying asset values or prospects of the Company. These factors include
macroeconomic developments in North America and globally, market perceptions of the attractiveness of particular
industries – including mining and nuclear energy – and volatile trading due to unpredictable general market or trading
sentiments.
The market price of Denison’s Shares are likely to increase or decrease in response to a number of events and factors,
including: Denison’s operating performance and the performance of competitors and other similar companies; the
breadth of the public market for the Shares and the attractiveness of alternative investments; volatility in metal prices;
the number of Shares to be publicly traded after an offering pursuant to any prospectus or prospectus supplement; the
public’s reaction to the Company’s press releases, material change reports, other public announcements and its filings
with the various securities regulatory authorities; the arrival or departure of key personnel; public perception of the
nuclear industry and reaction to the developments therein; changes in recommendations by research analysts who
track the Shares or the shares of other companies in the sector; developments that affect the market for all resource
sector securities; changes in general economic and/or political conditions (including inflation); acquisitions, strategic
alliances or joint ventures involving Denison or its competitors; and the other risk factors listed herein.
Many of these factors that could impact the market price of the Company’s Shares are not directly related to Denison’s
results or operations and are, therefore, not within Denison’s control. Accordingly, the market price of the Shares of
Denison at any given point in time may not accurately reflect the long-term value of Denison.
Financial markets have recently experienced significant price and volume fluctuations that have particularly affected
the market prices of equity securities of companies and that have often been unrelated to the operating performance,
underlying asset values or prospects of such companies. From January 1, 2021 to December 31, 2021, the closing
price of the Shares on the NYSE American ranged as low as US$0.63 to as high as US$2.14 and daily trading volumes
ranged from approximately 98,422 to 8,204,064 Shares and the closing price of the Shares on the TSX ranged from
as low as C$0.79 to as high as C$2.64 and daily trading volumes ranged from approximately 334,165 to 27,471,538
Shares. These volatilities do not represent all trading in the Shares and significant trading volume is facilitated through
other trading markets for the Shares in Canada or the United States; for example, such reported aggregate daily trading
volumes for “DNN” has ranged from approximately 2,373,700 to 219,113,700 in calendar 2021.
During calendar 2021, the Company has been affected by the results of a seemingly significant change in investor
sentiment towards nuclear energy and uranium in connection with a global trend towards the transition to “clean” energy
sources, which is believed to have resulted in increased trading volumes and price volatility of the Shares. Investor
sentiment can change quickly, and investors may make investment decisions based on third party media and/or social
media discussions that may not accurately reflect the Company’s disclosure or actual results of operations. Such
sentiments may cause volatility in the trading price of the Shares and may or may not be reflective of individual investor’s
views as to the value of the underlying assets.
Market sentiment and trading in an entity’s shares can also be impacted by its inclusion in, or exclusion from, certain
equity benchmarks and/or investable indices. For example, in 2021 Denison’s Shares were added to the S&P/TSX
Composite Index, the headline index for the Canadian equity market. This inclusion could impact the Company’s Share
price positively, with increased interest in purchasing the Shares. However, a decline in the index could result in
investors selling the Shares of the Company for reasons that are unrelated to the Company’s operating results,
underlying asset values or prospects. In addition, the removal of the Company from the S&P/TSX Composite could
have a negative impact on the market price of Shares, as certain shareholders who link investments to the index could
be required to sell the Shares for reasons that are unrelated to the Company’s operating results, underlying asset
values or prospects our actual results.
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MANAGEMENT’S DISCUSSION & ANALYSIS
Accordingly, the market price of the Shares may decline even if the Company’s operating results, underlying asset
values or prospects have not changed. Additionally, these factors, as well as other related factors, may cause
decreases in asset values that are deemed to be other than temporary, which may result in impairment losses. There
can be no assurance that continuing fluctuations in price and volume will not occur. If such increased levels of volatility
and market turmoil continue, the Company’s operations could be adversely impacted, and the trading price of Denison’s
Shares may be materially adversely affected.
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 Issuances
While active in exploring for new uranium discoveries in the Athabasca Basin region, Denison’s present focus is on
advancing Wheeler River to a development decision, with the potential to become the next large scale uranium producer
in Canada. Denison will require additional funds to further such activities.
Denison may sell additional equity securities (including through the sale of securities convertible into common shares)
and may issue additional debt or equity securities to finance its exploration, evaluation, development, construction, and
other operations, acquisitions or other projects. Denison is authorized to issue an unlimited number of common shares.
Denison cannot predict the size of future sales and issuances of debt or equity securities or the effect, if any, that future
sales and issuances of debt or equity securities will have on the market price of the Shares. Sales or issuances of a
substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing
market prices for the Shares. With any additional sale or issuance of equity securities, investors may suffer dilution of
their voting power and it could 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, Orano Canada is the operator and majority owner of the MLJV and MWJV in Saskatchewan, Canada.
The McClean Lake mill employs unionized workers who work under collective agreements. Orano Canada, as the
operator, is responsible for most operational and production decisions and all dealings with unionized employees.
Orano Canada may not be successful in its attempts to renegotiate the collective agreements, which may impact mill
and mining operations. Similarly, Orano Canada is responsible for all licensing and dealings with various regulatory
authorities. Orano Canada 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. 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.
Reliance on Contractors and Experts
In various aspects of its operations, Denison relies on the services, expertise and recommendations of its service
providers and their employees and contractors, whom often are engaged at significant expense to the Company. For
example, the decision as to whether a property contains a commercial mineral deposit and should be brought into
production will depend in large part upon the results of exploration programs and/or feasibility studies, and the
recommendations of duly qualified third party engineers and/or geologists. In addition, while Denison emphasizes the
importance of conducting operations in a technically sound, safe and sustainable manner, it cannot exert absolute
control over the actions of these third parties when providing services to Denison or otherwise operating on Denison’s
properties. Any material error, omission, act of negligence or act resulting in a technical failure, environmental pollution,
accidents or spills, industrial and transportation accidents, work stoppages or other actions could adversely affect the
Company’s operations and financial condition.
Acquisition of Physical Uranium
The Company used the substantial majority of the proceeds of the March 2021 unit offering in order to fund the purchase
of physical uranium as part of a financing initiative in connection with the potential advancement of the Company’s
uranium projects. There is no assurance that the strategy will be successful. Specific risks to the achievement of this
strategy include the following:
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MANAGEMENT’S DISCUSSION & ANALYSIS
•
The Company intends to use the physical uranium, in part, to support the potential financing of the development
of the Wheeler River project. There is no assurance that the physical uranium may be pledged as security for any
potential financing, that the full value of the uranium held will be recognized by any party providing financing or
that the Company’s ownership of the physical uranium will enhance the Company’s ability to access future project
financing. Further, should the purchased uranium be used as security for a future financing, there is a risk that it
would no longer be available for sale by the Company to meet any other objectives described for use of the
proceeds of the March 2021 Offering.
•
The Company may be required to sell a portion or all of the physical uranium accumulated to funds its operations
should other forms of financing not be available to fund the Company’s capital requirements.
Reliance on Facilities
Any uranium currently owned by the Company, such as the 2.5 million pounds U3O8 acquired with the proceeds of the
March 2021 unit offering, will be stored at one or more licensed uranium conversion facilities (‘Facilities’) owned by
different organizations. As the number of duly licensed Facilities is limited, there can be no assurance that storage
arrangements that are commercially beneficial to the Company will be readily available. Failure to negotiate
commercially reasonable storage terms with the Facilities may have a material impact on the Company’s plans with
respect to the physical uranium holdings.
Any loss or damage of the uranium may not be fully covered or absolved by contractual arrangements with the Facilities
or the Company’s insurance arrangements, and the Company may be financially and legally responsible for losses
and/or damages not covered by indemnity provisions or insurance. Any failure to recover all of the uranium holdings
could have a material adverse effect on the financial condition of the Company.
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
its mining assets and operations located in the United States to Energy Fuels Inc., the sale of its mining assets and
operations located in Mongolia to Uranium Industry a.s., the sale of its mining assets and operations located in Africa
to GoviEx, the optioning of the Moore Lake property to Skyharbour Resources Ltd., the acquisition of an 80% interest
in the Hook-Carter property from ALX Resources Corp., the acquisition of an interest in the Moon Lake property from
CanAlaska Uranium Ltd., entering into the APG Arrangement, the acquisition of Cameco Corp’s interest in the WRJV
and the JCU Acquisition. 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 Shares.
Inability to Exploit, Expand and Replace Mineral Reserves and Mineral Resources
Denison’s mineral reserves and resources at its Wheeler River, Waterbury Lake, McClean Lake and Midwest projects
are Denison’s material future sources of possible uranium production. Unless other mineral reserves or resources are
discovered or acquired, Denison’s sources of future production for uranium concentrates will decrease over time if its
current mineral reserves and mineral resources are exploited or otherwise 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 demonstrate development potential,
there can be no assurance that they can or will be successfully developed and put into production in future years.
Foreign Exchange Rates
The Company maintains its accounting records and reports its financial position and results in Canadian dollars.
Fluctuations in the U.S. currency exchange rate relative to the Canadian currency could significantly impact the
Company, including its financial results, operations or the trading value of its securities, as the price of uranium is
quoted in U.S. dollars, and a decrease in value of U.S. dollars would result in a relative decrease in the valuation of
uranium and the associated market value from a Canadian currency perspective. In addition, the Company’s
outstanding common share purchase warrants (issued pursuant to the February 2021 Offering and the March 2021
Offering) have a U.S. dollar denominated exercise price, and fluctuations in relative currency exchange rates will impact
the Canadian dollar equivalent proceeds raised from the exercises of such warrants. Exchange rate fluctuations, and
any potential negative consequences thereof, are beyond the Company’s control.
46
MANAGEMENT’S DISCUSSION & ANALYSIS
Competition for Properties
Significant competition exists for the limited supply of mineral lands available for acquisition. Participants in the mining
business include large established companies with long operating histories. In certain circumstances, the Company
may be at a disadvantage in acquiring new properties as competitors may have incumbency advantages, 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.
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 federal, provincial and local governments in Canada, as well as by 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. If such
defects or challenges cover a material portion of Denison's property, they could have a material adverse effect on
Denison's results of operations, financial condition, reported mineral reserves and resources and/or long-term business
prospects.
Ability to Maintain Obligations under the 2022 Credit Facility and Other Debt
The 2022 Credit Facility only has a term of one year, and will need to be renewed on or before January 31, 2023. There
is no certainty what terms of any renewal may be, or any assurance that such renewal will be made available to Denison.
Denison is required to satisfy certain financial covenants in order to maintain its good standing under the 2022 Credit
Facility. Denison is also subject to a number of restrictive covenants under the 2022 Credit Facility and the APG
Arrangement, such as restrictions on Denison’s ability to incur additional indebtedness and sell, transfer of otherwise
dispose of material assets. 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,
which could cause Denison to fail to satisfy its obligations under the 2022 Credit Facility, APG Arrangement 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 2022 Credit Facility and APG Arrangement are secured by Denison Mines Inc.’s (‘DMI') main properties
by a pledge of the shares of DMI. If Denison were to default on its obligations under the 2022 Credit Facility, APG
Arrangement 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 Arrangement 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 Arrangement, 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.
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. A portion 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 security requirements are 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.
47
MANAGEMENT’S DISCUSSION & ANALYSIS
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 post-closure mine care and maintenance 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,
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 in which it has an interest; personal
injury or death; environmental damage; delays in or interruption of or cessation of exploration, development, production
or processing activities; 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 exploration, mining and processing, as
applicable, additional costs and risks are incurred by Denison and its joint venture partners 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.
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) and the United States Foreign Corrupt Practices Act of 1977, as amended. 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.
Climate Change
Due to changes in local and global climatic conditions, many analysts and scientists predict an increase in the frequency
of extreme weather events such as floods, droughts, forest and brush fires and extreme storms. Such events could
materially disrupt the Company’s operations, particularly if they affect the Company’s sites, impact local infrastructure
or threaten the health and safety of the Company’s employees, contractors and/or local communities. In addition,
reported warming trends could result in later freeze-ups and warmer lake temperatures in the Athabasca Basin region,
potentially affecting the Company’s winter exploration programs at certain of its projects. Any such event could result
in material economic harm to Denison.
The Company is focused on operating in a manner designed to minimize the environmental impacts of its activities;
however, certain environmental impacts from mineral exploration and mining activities may be inevitable. Increased
environmental regulation and/or the use of fiscal policy by regulators in response to concerns over climate change and
other environmental impacts, such as additional taxes levied on activities deemed harmful to the environment, could
have a material adverse effect on Denison’s financial condition or results of operations.
48
MANAGEMENT’S DISCUSSION & ANALYSIS
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.
The ability of the IT function to support the Company’s business in the event of any such occurrence 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. In addition, Denison’s ability to keep essential operating staff in place may also be challenged as a result
of potential COVID-19 outbreaks or quarantines.
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 and officers 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, where applicable for directors, 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’).
49
MANAGEMENT’S DISCUSSION & ANALYSIS
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.
Potential Influence of KEPCO and KHNP
Effective December 2016, KEPCO indirectly transferred the majority of its interest in Denison to KHNP Canada.
Denison and KHNP Canada subsequently entered into the KHNP SRA (on substantially similar terms as the original
strategic relationship agreement between Denison and KEPCO), pursuant to which KHNP Canada is contractually
entitled to Board representation. Provided KHNP Canada holds over 5% of the Shares, it is entitled to nominate one
director for election to the Board at any Shareholder meeting.
KHNP Canada’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 KHNP Canada influence on decisions made by Denison's Board. Although KHNP
Canada’s director nominee 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 KHNP and he or she may give special attention to KHNP’s or
KEPCO’s interests as indirect Shareholders. The interests of KHNP and KEPCO, as indirect Shareholders, may not
always be consistent with the interests of other Shareholders.
The KHNP SRA also includes provisions granting KHNP Canada 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
KHNP Canada 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 indirect 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 or KHNP Canada to support such an acquisition.
United States investors may not be able to obtain enforcement of civil liabilities against the Company
The enforcement by investors of civil liabilities under the United States federal or state securities laws may be affected
adversely by the fact that the Company is governed by the OBCA, that the majority of the Company’s officers and
directors are residents of Canada, and that all, or a substantial portion, of their assets and the Company’s assets are
located outside the United States. It may not be possible for investors to effect service of process within the United
States on certain of its directors and officers or enforce judgments obtained in the United States courts against the
Company or certain of the Company’s directors and officers based upon the civil liability provisions of United States
federal securities laws or the securities laws of any state of the United States.
There is some doubt as to whether a judgment of a United States court based solely upon the civil liability provisions
of United States federal or state securities laws would be enforceable in Canada against the Company or its directors
and officers. There is also doubt as to whether an original action could be brought in Canada against the Company or
its directors and officers to enforce liabilities based solely upon United States federal or state securities laws.
If the Company is characterized as a passive foreign investment company, U.S. holders may be subject to
adverse U.S. federal income tax consequences
U.S. investors should be aware that they could be subject to certain adverse U.S. federal income tax consequences in
the event that the Company is classified as a “passive foreign investment company” (“PFIC”) for U.S. federal income
tax purposes. The determination of whether the Company is a PFIC for a taxable year depends, in part, on the
application of complex U.S. federal income tax rules, which are subject to differing interpretations, and the determination
will depend on the composition of the Company’s income, expenses and assets from time to time and the nature of the
activities performed by the Company’s officers and employees. The Company may be a PFIC in one or more prior tax
years, in the current tax year and in subsequent tax years. Prospective investors should carefully read the discussion
below under the heading “Material United States Federal Income Tax Considerations for U.S. Holders” and the tax
discussion in any applicable prospectus supplement for more information and consult their own tax advisors regarding
the likelihood and consequences of the Company being treated as a PFIC for U.S. federal income tax purposes,
50
MANAGEMENT’S DISCUSSION & ANALYSIS
including the advisability of making certain elections that may mitigate certain possible adverse U.S. federal income tax
consequences that may result in an inclusion in gross income without receipt of such income.
As a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a U.S. domestic
issuer, which may limit the information publicly available to U.S. investors
The Company is a foreign private issuer under applicable U.S. federal securities laws and, therefore, is not required to
comply with all of the periodic disclosure and current reporting requirements of the U.S. Exchange Act and related rules
and regulations. As a result, the Company does not file the same reports that a U.S. domestic issuer would file with the
SEC, although it will be required to file with or furnish to the SEC the continuous disclosure documents that the
Company is required to file in Canada under Canadian securities laws. In addition, the Company’s officers, directors
and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of
the U.S. Exchange Act. Therefore, the Company’s securityholders may not know on as timely a basis when its officers,
directors and principal shareholders purchase or sell securities of the Company as the reporting periods under the
corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer, the Company
is exempt from the proxy rules under the U.S. Exchange Act.
The Company may lose its foreign private issuer status in the future, which could result in significant additional
costs and expenses to the Company
The Company may lose its foreign private issuer status if a majority of the Company’s common shares are owned of
record in the United States and the Company fails to meet the additional requirements necessary to avoid loss of foreign
private issuer status. The regulatory and compliance costs to the Company under U.S. federal securities laws as a U.S.
domestic issuer may be significantly more than the costs the Company incurs as a Canadian foreign private issuer
eligible to use the multijurisdictional disclosure system. If the Company is not a foreign private issuer, it would not be
eligible to use the multijurisdictional disclosure system or other foreign issuer forms and would be required to file
periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more
detailed and extensive than the forms available to a foreign private issuer.
QUALIFIED PERSON
David Bronkhorst, P.Eng., Denison’s Vice President Operations, who is a ‘Qualified Person’ within the meaning of this
term in NI 43-101, has prepared and/or reviewed and confirmed the scientific and technical disclosure pertaining to the
Company’s evaluation programs.
Andy Yackulic, P.Geo., Denison’s Director Exploration, who is a ‘Qualified Person’ within the meaning of this term in
NI 43-101, has prepared and/or reviewed and confirmed the scientific and technical disclosure pertaining to the
Company’s exploration programs.
For more information regarding each of Denison’s material projects discussed herein, you are encouraged to refer to
the applicable technical reports available on the Company’s website and under the Company’s profile on SEDAR
(www.sedar.com) and EDGAR (www.sec.gov/edgar.shtml):
• For the Wheeler River project, the ‘Prefeasibility Study Report for the Wheeler River Uranium Project
Saskatchewan, Canada’ dated October 30, 2018;
• For the Waterbury Lake project, ‘Preliminary Economic Assessment for the Tthe Heldeth Túé (J Zone) Deposit,
Waterbury Lake Property, Northern Saskatchewan, Canada’ with an effective date of October 30, 2020;
• For the Midwest project, ‘Technical Report with an Updated Mineral Resource Estimate for the Midwest Property,
Northern Saskatchewan, Canada’ dated March 26, 2018; and
• For the McClean Lake project, (A) the ‘Technical Report on the Denison Mines Inc. Uranium Properties,
Saskatchewan, Canada’ dated November 21, 2005, as revised February 16, 2006, (B) the ‘Technical Report on the
Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan, Canada’ dated March 31, 2006, and (C) the
‘Technical Report on the Mineral Resource Estimate for the McClean North Uranium Deposits, Saskatchewan’
dated January 31, 2007.
ASSAY PROCEDURES AND DATA VERIFICATION
The Company reports preliminary radiometric equivalent grades (‘eU3O8’), derived from a calibrated down-hole total
gamma probe, during or upon completion of its exploration programs and subsequently reports definitive U3O8 assay
grades following sampling and chemical analysis of the mineralized drill core. Uranium assays are performed on split
51
MANAGEMENT’S DISCUSSION & ANALYSIS
core samples by the Saskatchewan Research Council (‘SRC’) Geoanalytical Laboratories using an ISO/IEC
17025:2005 accredited method for the determination of U3O8 weight %. Sample preparation involves crushing and
pulverizing core samples to 90% passing -106 microns. The resultant pulp is digested using aqua-regia and the solution
analyzed for U3O8 weight % using ICP-OES. Geochemical results from composite core samples are reported as parts
per million (‘ppm’) obtained from a partial HNO3:HCl digest with an ICP-MS finish. Boron values are obtained through
NaO2/NaCO3 fusion followed by an ICP-OES finish. All data are subject to verification procedures by qualified persons
employed by Denison prior to disclosure. For further details on Denison’s sampling, analysis, quality assurance program
and quality control measures and data verification procedures please see Denison's Annual Information Form dated
March 26, 2021 available on the Company’s website and filed under the Company's profile on SEDAR
(www.sedar.com) and in its Form 40-F available on EDGAR at www.sec.gov/edgar.shtml.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this MD&A constitutes ‘forward-looking information’, within the meaning of the
applicable United States and Canadian legislation concerning the business, operations and financial performance and
condition of Denison.
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as ‘plans’,
‘expects’, ‘budget’, ‘scheduled’, ‘estimates’, ‘forecasts’, ‘intends’, ‘anticipates’, or ‘believes’, or the negatives and/or
variations of such words and phrases, or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or
‘will be taken’, ‘occur’, ‘be achieved’ or ‘has the potential to’.
In particular, this MD&A contains forward-looking information pertaining to the following: Denison’s plans and objectives
for 2022 and beyond, including the proposed use of proceeds of recent equity financings; the benefits to be derived
from corporate transactions, including commitments to acquire physical uranium, and estimates of related expenditures;
the estimates of Denison's mineral reserves and mineral resources; exploration, development and expansion plans and
objectives, including Denison’s planned engineering, environmental assessment and other evaluation programs, the
results of, and estimates and assumptions within, the PFS, FS, and statements regarding anticipated budgets, fees,
expenditures and timelines; expectations regarding Denison’s community engagement activities and related
agreements, including the Participation and Funding Agreement and Exploration Agreement with ERFN and the
anticipated continuity thereof; expectations regarding Denison’s joint venture ownership interests and the continuity of
its agreements with its partners; expectations regarding adding to its mineral reserves and resources through
acquisitions or exploration; expectations regarding the toll milling of Cigar Lake ores, including the impacts of COVID-
19; expectations regarding revenues and expenditures from its Closed Mines operations; and the annual operating
budget and capital expenditure programs, estimated exploration and development expenditures and reclamation costs
and Denison's share of same. Statements relating to ‘mineral reserves’ or ‘mineral resources’ are deemed to be
forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that
the mineral reserves and mineral resources described can be profitably produced in the future.
Forward looking statements are based on the opinions and estimates of management as of the date such statements
are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of Denison to be materially different from those expressed or
implied by such forward-looking statements. For example, the results of the Denison’s studies, including the PFS, trade-
off study, and field work, may not be maintained after further testing or be representative of actual mining plans for the
Phoenix deposit after further design and studies are completed. In addition, Denison may decide or otherwise be
required to discontinue testing, evaluation and development work at Wheeler River or other projects or its exploration
plans if it is unable to maintain or otherwise secure the necessary resources (such as testing facilities, capital funding,
regulatory approvals, etc.) or operations are otherwise affected by COVID-19 and its potentially far-reaching impacts.
Denison believes that the expectations reflected in this forward-looking information are reasonable but no assurance
can be given that these expectations will prove to be accurate and results may differ materially from those anticipated
in this forward-looking information. For a discussion in respect of risks and other factors that could influence forward-
looking events, please refer to the factors discussed in Denison’s Annual Information Form dated March 26, 2021 under
the heading ‘Risk Factors’. These factors are not, and should not be construed as being exhaustive.
Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking information
contained in this MD&A is expressly qualified by this cautionary statement. Any forward-looking information and the
assumptions made with respect thereto speaks only as of the date of this MD&A. Denison does not undertake any
obligation to publicly update or revise any forward-looking information after the date of this MD&A to conform such
information to actual results or to changes in Denison's expectations except as otherwise required by applicable
legislation.
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MANAGEMENT’S DISCUSSION & ANALYSIS
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources
and Probable Mineral Reserves: This MD&A may use the terms 'measured', 'indicated' and 'inferred' mineral resources which are
Canadian mining terms as defined in and required to be disclosed in accordance with National Instrument 43-101 – Standards of
Disclosure for Mineral Projects (‘NI 43-101’), which references the guidelines set out in the Canadian Institute of Mining, Metallurgy
and Petroleum (the ‘CIM’) – CIM Definition Standards on Mineral Resources and Mineral Reserves (‘CIM Standards’), adopted by the
CIM Council, as amended.
Until recently, the CIM Standards differed significantly from standards in the United States. Effective in 2019, the U.S. Securities and
Exchange Commission (the ‘SEC’) adopted amendments to its disclosure rules to modernize the mineral property disclosure
requirements for issuers whose securities are registered with the SEC under the Exchange Act (the ‘SEC Modernization Rules’). As
a result, the SEC now recognizes estimates of ‘measured mineral resources’, ‘indicated mineral resources’ and ‘inferred mineral
resources’. In addition, the SEC has amended its definitions of ‘proven mineral reserves’ and ‘probable mineral reserves’ to be
“substantially similar” to the corresponding definitions under the CIM Standards, as required under NI 43-101.
United States investors are cautioned that while the above terms are “substantially similar” to the corresponding CIM Definition
Standards, there are differences in the definitions under the SEC Modernization Rules and the CIM Standards. Accordingly, there is
no assurance any mineral reserves or mineral resources that Denison may report as ‘proven mineral reserves’, ‘probable mineral
reserves’, ‘measured mineral resources’, ‘indicated mineral resources’ and ‘inferred mineral resources’ under NI 43-101 would be the
same had the Company prepared those estimates under the standards adopted under the SEC Modernization Rules. Accordingly,
descriptions of mineral reserves and mineral resources in Denison’s disclosure may not be comparable to similar information made
public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder.
United States investors are also cautioned that while the SEC now recognizes ‘indicated mineral resources’ and ‘inferred mineral
resources’, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a
higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of
uncertainty as to their existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors
are cautioned not to assume that any ‘indicated mineral resources’ or ‘inferred mineral resources’ that the Company reports
are or will be economically or legally mineable. Further, ‘inferred mineral resources’ have a greater amount of uncertainty
as to their existence and as to whether they can be mined legally or economically. Therefore, United States investors are also
cautioned not to assume that all or any part of the ‘inferred mineral resources’ exist. In accordance with Canadian securities laws,
estimates of ‘inferred mineral resources’ cannot form the basis of feasibility or other economic studies, except in limited circumstances
permitted under NI 43-101.
53
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
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 KPMG 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.
/s/ “David D. Cates”
/s/ “Gabriel (Mac) McDonald”
David D. Cates
President and Chief Executive Officer
Officer
March 3, 2022
Gabriel (Mac) McDonald
Executive Vice-President Finance and Chief Financial
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, 2021.
The effectiveness of the Company’s internal control over financial reporting as at December 31, 2021 has been audited
by KPMG 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 2021
that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
55
KPMG LLP
Bay Adelaide Centre
333 Bay Street, Suite 4600
Toronto, ON M5H 2S5
Canada
Tel 416-777-8500
Fax 416-777-8818
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Denison Mines Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of
Denison Mines Corp. (the Company) as of December 31, 2021 and 2020, the
related consolidated statements of income (loss) and comprehensive income (loss),
changes in equity, and cash flow for the years then ended, and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as of December 31, 2021 and 2020, and its financial performance and
its cash flows for the years then ended, in conformity with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company’s internal
control over financial reporting as of December 31, 2021, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated March 3, 2022 expressed an unqualified opinion on the effectiveness of
the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements.
Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
© 2022 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Denison Mines Corp.
March 3, 2022
the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current
period audit of the consolidated financial statements that was communicated or
required to be communicated to the audit committee and that: (1) relates to
accounts or disclosures that are material to the consolidated financial statements
and (2) involved our especially challenging, subjective, or complex judgments. The
communication of a critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Indicators of impairment for mineral properties
As discussed in note 2I. to the consolidated financial statements, property, plant and
equipment assets are assessed at the end of each reporting period to determine if
there is any indication that the asset may be impaired. Mineral property assets are
assessed for impairment using the impairment indicators under IFRS 6 - Exploration
for and evaluation of mineral resources up until the commercial viability and
technical feasibility for the property is established. As discussed in Note 10 to the
consolidated financial statements, the Company’s mineral properties balance as of
December 31, 2021 was $179,788 thousand.
We identified the evaluation of indicators of impairment for mineral properties as a
critical audit matter. Assessing the Company’s evaluation of indicators of
impairment involved the application of a higher degree of auditor judgment.
Specifically, judgment was required to evaluate the facts and circumstances related
to the Company’s mineral properties, including assessing the Company’s future
plans for each property and exploration results.
The following are the primary procedures we performed to address this critical audit
matter. We evaluated the design and tested the operating effectiveness of certain
internal controls over the Company’s impairment indicator assessment process,
including controls related to the Company’s impairment indicator review for mineral
properties. We assessed the Company’s future plans by comparing them to the
most recent exploration program and budget approved by the Board of Directors
and evaluating the time period remaining for the Company’s right to explore them by
inspecting governmental filings.
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Company’s auditor since 2020.
Toronto, Canada
March 3, 2022
KPMG LLP
Bay Adelaide Centre
333 Bay Street, Suite 4600
Toronto, ON M5H 2S5
Canada
Tel 416-777-8500
Fax 416-777-8818
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Denison Mines Corp.
Opinion on Internal Control Over Financial Reporting
We have audited Denison Mines Corp.’s (the Company) internal control over
financial reporting as of December 31, 2021, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the
Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2021, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the consolidated statements
of financial position of the Company as of December 31, 2021 and 2020, the
related consolidated statements of income (loss) and comprehensive income
(loss), changes in equity and cash flow for each of the years then ended and the
related notes (collectively, the consolidated financial statements), and our report
dated March 3, 2022 expressed an unqualified opinion on those consolidated
financial statements.
Basis for Opinion
The Company’s 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. Our
responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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.
© 2022 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Denison Mines Corp.
March 3, 2022
Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.
Definition and Limitations 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 (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (2) 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
(3) 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.
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.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
March 3, 2022
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of Canadian dollars (“CAD”) except for share amounts)
At December 31
2021
At December 31
2020
ASSETS
Current
Cash and cash equivalents (note 4)
Trade and other receivables (note 5)
Inventories (note 6)
Investments-equity instruments (note 7)
Prepaid expenses and other
Non-Current
Inventories-ore in stockpiles (note 6)
Investments-equity instruments (note 7)
Investments-uranium (note 7)
Investments-joint venture (note 8)
Prepaid expenses and other
Restricted cash and investments (note 9)
Property, plant and equipment (note 10)
Total assets
LIABILITIES
Current
Accounts payable and accrued liabilities (note 11)
Warrants on investment (note 7)
Current portion of long-term liabilities:
Deferred revenue (note 12)
Post-employment benefits (note 13)
Reclamation obligations (note 14)
Other liabilities (note 16)
Non-Current
Deferred revenue (note 12)
Post-employment benefits (note 13)
Reclamation obligations (note 14)
Share purchase warrants liability (note 15)
Other liabilities (note 16)
Deferred income tax liability (note 17)
Total liabilities
EQUITY
Share capital (note 18)
Contributed surplus (note 19)
Deficit
Accumulated other comprehensive income (note 20)
Total equity
Total liabilities and equity
$
63,998 $
$
$
3,656
3,454
14,437
1,310
86,855
2,098
141
133,114
21,392
221
12,001
254,462
510,284 $
8,590 $
1,625
4,656
120
1,181
179
16,351
31,852
1,154
36,351
20,337
329
7,219
113,593
24,992
3,374
3,015
16,657
1,373
49,411
2,098
293
-
-
-
12,018
256,870
320,690
7,178
-
3,478
120
802
262
11,840
33,139
1,241
37,618
-
375
9,192
93,405
1,517,029
67,496
(1,189,610)
1,776
396,691
510,284 $
1,366,710
67,387
(1,208,587)
1,775
227,285
320,690
$
Issued and outstanding common shares (note 18)
812,429,995
Commitments and contingencies (note 25); Subsequent events (note 27)
The accompanying notes are an integral part of the consolidated financial statements
678,981,882
On behalf of the Board of Directors
/s/ ‘Ron F. Hochstein’
Ron F. Hochstein
Chair of the Board
/s/ ‘Patricia M. Volker’
Patricia M. Volker
Director
60
STATEMENTS
CONSOLIDATED
COMPREHENSIVE INCOME (LOSS)
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
OF
INCOME
(LOSS)
AND
(Expressed in thousands of CAD dollars except for share and per share amounts)
Year Ended December 31
2021
2020
REVENUES (note 22)
$
20,000 $
14,423
EXPENSES
Operating expenses (notes 21 and 22)
Exploration (note 22)
Evaluation (note 22)
General and administrative (note 22)
Other income (expense) (note 21)
Income (loss) before net finance expense, equity accounting
Finance expense, net (note 21)
Equity share of loss of joint venture (note 8)
Income (loss) before taxes
Income tax recovery (note 17):
Deferred
Net income (loss) for the period
Other comprehensive income (loss) (note 20):
Items that will not be reclassified to income (loss):
Experience gain-post employment liability
Items that are or may be subsequently reclassified to income (loss):
Foreign currency translation change
Comprehensive income (loss) for the period
Basic and diluted net income (loss) per share:
Basic
Diluted
(12,901)
(4,477)
(15,521)
(9,691)
44,163
1,573
21,573
(4,127)
(464)
16,982
1,995
$
18,977 $
(10,594)
(5,314)
(3,718)
(7,609)
(95)
(27,330)
(12,907)
(4,236)
-
(17,143)
860
(16,283)
-
638
$
1
18,978 $
3
(15,642)
$
$
0.02 $
0.02 $
(0.03)
(0.03)
Weighted-average number of shares outstanding (in thousands):
Basic
Diluted
783,684
793,668
628,441
628,441
The accompanying notes are an integral part of the consolidated financial statements
61
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of CAD dollars)
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Share capital (note 18)
Balance-beginning of period
Shares issued for cash, net of issue costs
Flow-through share premium
Share options exercised-cash
Share options exercised-transfer from contributed surplus
Share units exercised-transfer from contributed surplus
Share purchase warrants exercised-cash
Share purchase warrants exercised-warrant liability settled
Balance-end of period
Share purchase warrants
Balance-beginning of period
Share purchase warrants expired
Balance-end of period
Contributed surplus
Balance-beginning of period
Share-based compensation expense (note 19)
Share options exercised-transfer to share capital
Share units exercised-transfer to share capital
Warrants expired
Balance-end of period
Deficit
Balance-beginning of period
Net income (loss)
Balance-end of period
Accumulated other comprehensive income (note 20)
Balance-beginning of period
Experience gain-post employment liability
Foreign currency translation
Balance-end of period
Total Equity
Balance-beginning of period
Balance-end of period
Year Ended December 31
2021
2020
$ 1,366,710 $ 1,335,467
30,825
(22)
148
50
242
-
-
1,366,710
141,278
-
6,300
2,157
566
14
4
1,517,029
-
-
-
67,387
2,832
(2,157)
(566)
-
67,496
435
(435)
-
65,417
1,827
(50)
(242)
435
67,387
(1,208,587)
18,977
(1,189,610)
(1,192,304)
(16,283)
(1,208,587)
1,775
-
1
1,776
1,134
638
3
1,775
$
$
227,285 $
396,691 $
210,149
227,285
The accompanying notes are an integral part of the consolidated financial statements
62
CONSOLIDATED STATEMENTS OF CASH FLOW
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in thousands of CAD dollars)
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net income (loss) for the period
Adjustments and items not affecting cash and cash equivalents:
Depletion, depreciation, amortization and accretion
Joint venture-equity share of loss (note 8)
Recognition of deferred revenue (note 12)
Post-employment benefit payments (note 13)
Loss (gain) on reclamation obligation revisions (note 14)
Reclamation obligation expenditures (note 14)
Gain on debt obligation adjustment (note 16)
Deferred income tax recovery (note 17)
Share purchase warrants liability issue costs expensed (note 18)
Gain on property, plant and equipment disposals (note 21)
Fair value change losses (gains):
Investment-equity instruments (notes 7 and 21)
Investments-uranium (notes 7 and 21)
Warrants on investment (notes 7 and 21)
Share purchase warrants liabilities (notes 15 and 21)
Foreign exchange loss (note 21)
Share-based compensation (note 19)
Change in non-cash operating working capital items (note 21)
Net cash used in operating activities
INVESTING ACTIVITIES
Sale of investments-equity instruments (note 7)
Sale of warrants on investment (note 7)
Purchase of investments-equity (note 7)
Purchase of investments-uranium (note 7)
Issuance of Term loan and investment in joint venture (note 8)
Repayment of term loan (note 8)
Transaction costs-investment in joint venture (note 8)
Additions of property, plant and equipment (note 10)
Proceeds on disposal of property, plant and equipment
Decrease (increase) in restricted cash and investments
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Issuance of debt obligations (note 16)
Repayment of debt obligations (note 16)
Proceeds from unit issues, net of issue costs (note 18)
Proceeds from share issues, net of issue costs (note 18)
Proceeds from warrants exercised (note 18)
Proceeds from share options exercised (note 18)
Net cash provided by financing activities
Increase 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 (note 21)
Year Ended December 31
2021
2020
$
18,977 $
(16,283)
7,385
464
(3,207)
(110)
(585)
(815)
(4)
(1,995)
791
(135)
(10,454)
(41,440)
(1,149)
7,104
1,295
2,832
(199)
(21,245)
12,826
2,774
-
(91,674)
(40,950)
20,450
(1,356)
(1,230)
139
17
(99,004)
34
(252)
135,630
18,091
14
6,300
159,817
39,568
(562)
24,992
63,998 $
$
7,145
-
(2,762)
(90)
3,595
(826)
(2)
(860)
-
(405)
(5,046)
-
-
-
529
1,827
(307)
(13,485)
477
-
(7)
-
-
-
-
(278)
137
(24)
305
-
(467)
30,825
-
-
148
30,506
17,326
(524)
8,190
24,992
The accompanying notes are an integral part of the consolidated financial statements
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 2021 AND 2020
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in CAD dollars except for shares and per share amounts)
1. NATURE OF OPERATIONS
Denison Mines Corp. (“DMC”) and its subsidiary companies and joint arrangements (collectively, “Denison” or the
“Company”) are engaged in uranium mining related activities, which can include acquisition, exploration, and
development of uranium properties, as well as the extraction, processing and selling of, and investing in uranium.
The Company has an effective 95.0% interest in the Wheeler River Joint Venture (“WRJV”), a 66.90% interest in
the Waterbury Lake Uranium Limited Partnership (“WLULP”), a 22.5% interest in the McClean Lake Joint Venture
(“MLJV”) (which includes the McClean Lake mill) and a 25.17% interest in the Midwest Joint Venture (“MWJV”),
each of which are located in the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada.
The McClean Lake mill is contracted to provide toll milling services to the Cigar Lake Joint Venture (“CLJV”) under
the terms of a toll milling agreement between the parties (see note 12). In addition, the Company has varying
ownership interests in several other development and exploration projects located in Canada.
Through its 50% ownership of JCU (Canada) Exploration Company, Limited (“JCU”), Denison holds further indirect
interests in various uranium project joint ventures in Canada, including the Millennium project (JCU 30.099%), the
Kiggavik project (JCU 33.8123%) and Christie Lake (JCU 34.4508%). See note 8 for details.
The Company also provides mine decommissioning and other services (collectively “environmental services”)
through its Closed Mines Group, which manages Denison’s Elliot Lake reclamation projects and provides third-
party post-closure mine care and maintenance services. Prior to July 19, 2021, the Company was also the manager
of Uranium Participation Corporation (“UPC”). See note 23 for further details.
DMC is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its
registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J 1T1.
References to “2021” and “2020” refer to the year ended December 31, 2021 and the year ended December 31,
2020 respectively.
2. STATEMENT OF COMPLIANCE AND ACCOUNTING POLICIES
Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These financial statements were approved by the board of directors for issue on March 3, 2022.
Significant accounting policies
These consolidated financial statements are presented in Canadian dollars (“CAD”) and all financial information is
presented in CAD, unless otherwise noted.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amount
of assets, liabilities, revenues and expenses. Actual results may vary from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimates are revised and in any future periods affected. The areas involving
a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 3.
The significant accounting policies used in the preparation of these consolidated financial statements are described
below:
64
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
A. Consolidation principles
The financial statements of the Company include the accounts of DMC, its subsidiaries and its joint arrangements
(see note 26).
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the DMC group of entities 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 arrangements
A joint arrangement is a contractual arrangement of which the DMC group of entities and another party have joint
control. Joint arrangements are either joint operations or joint ventures. The classification of a joint arrangement
as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement.
The Company determines the type of joint arrangement in which it is involved by considering the structure and
form of the arrangement, the terms agreed by the parties in the contractual arrangement and other facts and
circumstances such as the parties’ rights and obligations arising from the arrangement.
Joint operations are contractual arrangements which involve joint control between the parties. The consolidated
financial statements of the Company include its share 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.
A joint venture is an arrangement over which the Company shares joint control and which provides the Company
with the rights to the net assets of the arrangement. Joint ventures are accounted for using the equity method.
Under the equity method, investments in joint ventures are initially recorded at cost and adjusted thereafter to
record the Company’s share of post-acquisition earnings or loss of the joint venture as if the joint venture had been
consolidated. The carrying value of investments in joint ventures 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.
B. Foreign currency translation
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 financial statements of entities that have a functional currency different from the presentation currency of DMC
(“foreign operations”) are translated into Canadian 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.
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
65
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
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.
C. 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.
D. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of a 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 are
discharged, cancelled or expire.
At initial recognition, the Company classifies its financial instruments in the following categories:
Financial assets and liabilities at fair value through profit or loss (“FVTPL”)
A financial asset is classified in this category if it is a derivative instrument, an equity instrument for which the
Company has not made the irrevocable election to classify as fair value through other comprehensive income
(“FVTOCI”), or a debt instrument that is not held within a business model whose objective includes holding the
financial assets in order to collect contractual cash flows that are solely payments of principal and interest.
Derivative financial liabilities and contingent consideration liabilities related to business combinations are also
classified in this category. 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 – within other income (expense) in the period in which
they arise.
Financial assets at amortized cost
A financial asset is classified in this category if it is a debt instrument and / or other similar asset that is held within
a business model whose objective is to hold the asset in order to collect the contractual cash flows (i.e. principal
and interest). Financial assets in this category 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.
Interest income is recorded in the statement of income or loss through finance income.
Financial liabilities at amortized cost
All financial liabilities that are not recorded as FVTPL are classified in this category and are initially recognized less
a discount (when material) to reduce the financial liabilities to fair value and less any directly attributable transaction
costs. Subsequently, financial liabilities are measured at amortized cost using the effective interest method. Interest
expense is recorded in the statement of income or loss through finance expense.
Refer to the “Fair Value of Financial Instruments” section of note 24 for the Company’s classification of its financial
assets and liabilities within the fair value hierarchy.
E. Impairment of financial assets
At each reporting date, the Company assesses the expected credit losses associated with its financial assets that
are not carried at FVTPL. Expected credit losses are calculated based on the difference between the contractual
cash flows and the cash flows that the Company expects to receive, discounted, where applicable, based on the
asset’s original effective interest rate.
For “Trade and other receivables”, the Company calculates expected credit losses based on historical credit loss
experience, adjusted for forward-looking factors specific to debtors and the economic environment. In recording
an impairment loss, the carrying amount of the asset is reduced by this computed amount either directly or indirectly
through the use of an allowance account.
66
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
F. Inventories
Expenditures, including depreciation, depletion and amortization of production assets, incurred in the mining and
processing activities that will result in future uranium concentrate production, are deferred and accumulated as ore
in stockpiles, in-process inventories and concentrate inventories. These amounts are carried at the lower of
weighted average cost or net realizable value (“NRV”). NRV is calculated as the estimated future uranium
concentrate selling price in the ordinary course of business (net of selling costs) less the 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 weighted average cost per ton 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 weighted 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 NRV, the materials are written down to NRV. In such circumstances, the replacement cost of
the materials may be the best available measure of their net realizable value.
G. Investments-uranium
The Company’s uranium investments are held for long-term capital appreciation. Investments in uranium are
initially recorded at cost, on the date that control of the uranium passes to the Company.
Cost includes the purchase price and any directly attributable transaction costs. Subsequent to initial recognition,
investments in uranium are measured at fair value at each reporting period end. Fair value is determined based
on the most recent month-end spot prices for uranium published by UxC LLC (“UxC”) and converted to Canadian
dollars using the foreign exchange rate at the date of the consolidated statement of financial position. Related fair
value gains and losses subsequent to initial recognition are recorded in the consolidated statement of income
(loss) as a component of “Other income (expense)” in the period in which they arise.
H. Property, plant and equipment
Plant and equipment
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 and loss 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 estimated 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 of other
income or expense. The Company allocates the amount initially recognized in respect of an item of plant and
equipment to its significant parts and depreciates separately each such part over its useful life. Residual values,
methods of depreciation and useful lives of the assets are reviewed at least annually and adjusted if appropriate.
67
Where straight-line depreciation is utilized, the range of useful lives for various asset classes is generally as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Buildings
Production machinery and equipment
Other
15 - 20 years;
5 - 7 years;
3 - 5 years.
Mineral property acquisition, exploration, evaluation and development costs
Costs relating to mineral and / or exploration rights acquired through a business combination or asset acquisition
are capitalized and reported as part of “Property, plant and equipment”.
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 “Advanced
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 can 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 viability and technical feasibility has been established for a property, the property is classified
as a “Development Stage” mineral property, an impairment test is performed on transition, 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 development 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 reserves and 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 in the statement of income or loss as a gain or loss on sale within other income and
expense.
Lease assets (and lease obligations)
At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease, if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. To assess whether a contract conveys the right to control the use of an identified
asset, the Company assesses whether:
•
•
•
the contract involves the use of an identified asset – this may be specified explicitly or implicitly and should be
physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has
a substantive substitution right, then the asset is not identified;
the Company has the right to obtain substantially all of the economic benefits from the use of the asset
throughout the period of use; and
the Company has the right to direct the use of the asset. The Company has this right when it has the decision-
making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases
where the decision about how and for what purpose the asset is used is predetermined, the Company has the
right to direct the use of the asset if either (a) the Company has the right to operate the asset; or (b) the
Company designed the asset in a way that predetermines how and for what purpose it will be used.
If the contract contains a lease, the Company accounts for the lease and non-lease components separately. For
the lease component, a right-of-use asset and a corresponding lease liability are set-up at the date at which the
leased asset is available for use by the Company. The right-of-use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
68
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
The lease payments associated with the lease liability are discounted using either the interest rate implicit in the
lease, if available, or the Company’s incremental borrowing rate. Each lease payment is allocated between the
liability and the finance cost (i.e. accretion) so as to produce a constant rate of interest on the remaining lease
liability balance.
I.
Impairment of non-financial assets
Property, plant and equipment 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 level, or
cash generating unit (“CGU”), for which there are separately identifiable cash inflows. 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 assessed for impairment using the impairment indicators under IFRS 6 “Exploration
for and Evaluation of Mineral Resources” up until the commercial viability and technical feasibility for the property
is established. From that point onwards, mineral property assets are tested for impairment using the impairment
indicators of IAS 36 “Impairment of Assets”.
J. Employee benefits
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 obligation’s re-measurement date.
Share-based compensation
The Company uses a fair value-based method of accounting for share 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 share-based compensation expense and the contributed surplus account. When such
share options are exercised, the proceeds received by the Company, together with the respective amount from
contributed surplus, are credited to share capital.
The Company also has a share unit plan pursuant to which it may grant share units to employees – the share units
are equity-settled awards. The Company determines the fair value of the awards on the date of grant. The cost is
recognized on a graded method basis, adjusted for expected forfeitures, over the applicable vesting period, as an
increase in share-based compensation expense and the contributed surplus account. When such share units are
settled for common shares, the applicable amounts of contributed surplus are credited to share capital.
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.
K. Reclamation provisions
Reclamation provisions, which are legal and constructive obligations related to the retirement of tangible long-lived
assets, are recognized when such obligations are incurred and 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
69
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
amounts of the related asset, if one exists, 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 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 liability.
L. 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 impact of the discount is material. The Company
performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.
M. 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 the statement of income or loss (or comprehensive income or
loss in some specific cases), 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.
N. 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 of the tax deduction to the flow-through shareholders, is
recorded - with the difference between the liability and the value of the tax assets renounced being recorded as a
70
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.
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
O. Revenue recognition
Revenue from pre-sold toll milling services
Revenue from the pre-sale of toll milling arrangement cash flows is recognized as the toll milling services are
provided. At contract inception, the Company estimates the expected transaction price of the toll milling services
being sold based on available information and calculates an average per unit transaction price that applies over
the life of the contract. This unit price is used to draw-down the deferred revenue balance as the toll milling services
occur. When changes occur to the expected timing, or volume of toll milling services, the per unit transaction price
is adjusted to reflect the change (such review to be done annually, at a minimum), and a cumulative catch-up
adjustment is made to reflect the updated rate. The amount of the upfront payment received from the toll milling
pre-sale arrangements includes a significant financing component due to the longer-term nature of such
agreements. As such, the Company also recognizes accretion expense on the deferred revenue balance which is
recorded in the statement of income or loss through “Finance expense, net”.
Revenue from environmental services (i.e. Closed Mines Group)
Environmental service contracts represent a series of distinct performance obligations that are substantially the
same and have the same pattern of transfer of control to the customer. The transaction price is estimated at
contract inception and is recognized over the life of the contract as control is transferred to the customer. Variable
consideration, where applicable, is estimated at contract inception using either the expected value method or the
most likely amount method. If it is highly probable that a subsequent reversal of revenue will not occur when the
uncertainty has been resolved, the Company will recognize as revenue the estimated transaction price, including
the estimate of the variable portion, upon transfer of control to the customer, otherwise the variable portion of the
transaction price will be constrained, and will not be recognized as revenue until the uncertainty has been resolved.
Revenue from management services (i.e. UPC)
The management services arrangement with UPC represented a series of distinct performance obligations that
are substantially the same and have the same pattern of transfer of control to the customer. The transaction price
for the contract is estimated at contract inception and is recognized over the life of the contract as control is
transferred to the customer as the services are provided. The variable consideration related to the net asset value
(“NAV”) based management fee was estimated at contract inception using the expected value method. It was
determined that it is highly probable that a subsequent reversal of revenue would occur if the variable consideration
was included in the transaction price, and as such, the variable portion of the transaction price was measured and
recognized when the uncertainty has been resolved (i.e. when the actual NAV has been calculated).
Commission revenue earned on acquisition or sale of uranium oxide concentrates (“U3O8”) and and uranium
hexafluoride (“UF6”) on behalf of UPC (or other parties where Denison acts as an agent) was recognized when
control of the related U3O8 or UF6 passes to the customer, which was the date when title of the U3O8 and UF6
passes to the customer.
On July 19, 2021, UPC and Sprott Asset Management LP (“Sprott”) completed a plan of arrangement whereby
UPC shareholders became unitholders of the Sprott Physical Uranium Trust, a newly formed entity managed by
Sprott (the “UPC Transaction”). In conjunction with the completion of the UPC Transaction, the MSA between
Denison and UPC was terminated in accordance with the termination provisions therein and Denison received a
termination payment from UPC of $5,848,000 which was recognized in revenue.
Revenue from spot sales of uranium
In a uranium supply arrangement, the Company is contractually obligated to provide uranium concentrates to the
customer. Each delivery is considered a separate performance obligation under the contract – revenue is
measured based on the transaction price specified in the contract and the Company recognizes revenue when
control to the uranium has been transferred to the customer.
Uranium can be delivered either to the customer directly (physical deliveries) or notionally under title within a
uranium storage facility (notional deliveries). For physical deliveries to customers, the terms in the supply
arrangement specify the location of delivery and revenue is recognized when control transfers to the customer
71
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
which is generally when the uranium has been delivered and accepted by the customer at that location. For notional
deliveries at a uranium storage facility, revenue is recognized on the date that the Company specifies the storage
facility to transfer title of a contractually specified quantity of uranium to a customer’s account at the storage facility.
P. Earnings (loss) per share
Basic earnings (loss) 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.
3. 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 mill processing 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 or 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
72
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
or settled. The determination of the ability of the Company to utilize tax loss carry forwards and other deferred tax
assets 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. The valuation of the liability typically involves 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.
4. CASH AND CASH EQUIVALENTS
The cash and cash equivalent balance consists of:
(in thousands)
Cash
Cash in MLJV and MWJV
Cash equivalents
At December 31
At December 31
2021
2020
$
$
2,002
1,275
60,721
63,998
$
$
12,004
540
12,448
24,992
Cash equivalents consist of various investment savings account instruments and money market funds, all of which
are short term in nature, highly liquid and readily convertible into cash.
5. 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
At December 31
At December 31
2021
2020
$
$
2,866
533
255
2
3,656
$
$
2,644
394
154
182
3,374
73
6.
INVENTORIES
The inventories balance consists of:
(in thousands)
Uranium concentrates
Inventory of ore in stockpiles
Mine and mill supplies in MLJV
Inventories-by balance sheet presentation:
Current
Long term-ore in stockpiles
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
2021
At December 31
2020
$
$
$
$
451
2,098
3,003
5,552
3,454
2,098
5,552
$
$
$
$
-
2,098
3,015
5,113
3,015
2,098
5,113
Long-term ore in stockpile inventory represents an estimate of the quantity of ore on the stockpile in excess of the
next twelve months of planned mill production.
7.
INVESTMENTS
The investments balance consists of:
(in thousands)
Investments:
Equity instruments
Shares
Warrants
Uranium
Investments-by balance sheet presentation:
Current
Long-term
At December 31
2021
At December 31
2020
$
$
$
$
14,349
229
133,114
147,692
14,437
133,255
147,692
$
$
$
$
16,657
293
-
16,950
16,657
293
16,950
Total
12,104
270
7
(477)
5,046
16,950
91,674
(12,826)
51,894
147,692
The investments continuity summary is as follows:
(in thousands)
Equity
Instruments
Physical
Uranium
Balance-January 1, 2020
Proceeds from property disposal
Purchase of investments
Sale of investments
Fair value gain to profit and loss (note 21)
Balance-December 31, 2020
Purchase of investments
Sale of investments
Fair value gain to profit and loss (note 21)
Balance-December 31, 2021
$
$
$
12,104
270
7
(477)
5,046
16,950
-
(12,826)
10,454
14,578
$
$
$
-
-
-
-
-
-
91,674
-
41,440
133,114
$
$
$
At December 31, 2021, the Company holds equity instruments consisting of shares and warrants in publicly traded
companies and no debt instruments. Non-current equity instruments consist of warrants in publicly traded
companies exercisable for a period more than one year after the balance sheet date.
74
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Investment in uranium
During the year ended December 31, 2021, the Company acquired a total of 2,500,000 pounds of physical uranium
as U3O8 at a cost of $91,674,000 (USD$74,140,000), including purchase commissions. The uranium is being held
as a long-term investment.
Sale of investment and issuance of warrants on investment
During the year ended December 31, 2021, the Company sold by private agreement (1) 32,500,000 common
shares of GoviEx Uranium Inc. (“GoviEx”) and (2) 32,500,000 common share purchase warrants, entitling the
holder to acquire one additional common share of GoviEx owned by Denison (“GoviEx Warrants”), for combined
gross proceeds of $15,600,000. The proceeds from this transaction were allocated between the GoviEx common
shares sold and the GoviEx Warrants issued on a relative fair value basis, resulting in net proceeds from the
disposal of GoviEx common shares of $12,826,000 and proceeds from the issuance of the GoviEx Warrants of
$2,774,000. The GoviEx shares sold had an initial cost of $2,698,000.
The GoviEx Warrants entitle the holder to acquire one additional common share of GoviEx owned by the Company
at an exercise price $0.80, for 18 months after issuance (April 2024).
The fair value of the GoviEx Warrants on the date of issuance was determined using the following assumptions in
the Black-Scholes option pricing model – expected volatility 76%, risk-free interest rate of 0.69%, dividend yield of
0% and an expected term of 18 months.
At December 31, 2021, the fair value of the GoviEX Warrants was estimated to be $1,625,000 ($0.05 per warrant),
based on the following assumptions in the Black-Scholes option pricing model – expected volatility of 82%, risk
free interest rate of 0.91%, dividend yield of 0% and an expected term of 16 months.
The Company continues to hold 32,644,000 common shares of GoviEx. If the GoviEx Warrants are exercised in
full, Denison will transfer a further 32,500,000 GoviEx common shares to the warrant holders.
(in thousands except warrant amounts)
Balance-December 31, 2020
Warrants on investment
Change in fair value (note 21)
Balance-December 31, 2021
8.
INVESTMENT IN JOINT VENTURE
The investment in joint venture balance consists of:
(in thousands)
Investment in joint venture:
JCU
A summary of the investment in JCU is as follows:
(in thousands)
Balance-December 31, 2020
Investment at cost:
Acquisition of 50% of JCU
Equity share of loss
Balance-December 31, 2021
75
Number of
Warrants
-
32,500,000
-
32,500,000
$
$
Warrant
Liability
-
2,774
(1,149)
1,625
At December 31
At December 31
2021
2020
$
$
21,392
21,392
$
$
-
-
$
$
-
21,856
(464)
21,392
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
On August 3, 2021, Denison completed the acquisition of 50% of JCU from UEX Corporation (“UEX”), for cash
consideration of $20,500,000 plus transaction costs of $1,356,000. Denison’s acquisition of its 50% interest in JCU
occurred immediately following UEX’s acquisition of all the outstanding shares of JCU from Overseas Uranium
Resources Development Co., Limited (“OURD”) for cash consideration of $41,000,000.
Pursuant to Denison's agreement with UEX, Denison provided UEX with an interest-free 90-day term loan of
$40,950,000 (the "Term Loan") to facilitate UEX's purchase of JCU from OURD. On the transfer of 50% of the
shares in JCU from UEX to Denison, $20,500,000 of the amount drawn under the Term Loan was deemed repaid
by UEX. UEX repaid the remainder of the Term Loan in September 2021.
JCU is a private company that holds a portfolio of twelve uranium project joint venture interests in Canada, including
a 10% interest the WRJV, a 30.099% interest in the Millennium project (Cameco Corporation 69.901%), a
33.8123% interest in the Kiggavik project (Orano Canada Inc. 66.1877%), and a 34.4508% interest in the Christie
Lake Project (UEX 65.5492%).
The following tables summarize the consolidated financial information of JCU on a 100% basis, taking into account
adjustments made by Denison for equity accounting purposes (including fair value adjustments and differences in
accounting policies). Denison records its equity share of earnings (loss) in JCU one month in arrears (due to the
information not yet being available), adjusted for any known material transactions that have occurred up to the
period end date on which Denison is reporting.
(in thousands)
Total current assets(2)
Total non-current assets
Total current liabilities
Total non-current liabilities
Total net assets
Revenue
Net loss
Other comprehensive income (loss)
Reconciliation of JCU net assets to Denison investment carrying value:
Net assets of JCU-at acquisition
Net loss
Net assets of JCU-at December 31, 2021
Denison ownership interest
Denison share of net assets of JCU
Investment in JCU
At December 31
2021
At
Acquisition (1)
$
$
4,851
38,067
(134)
-
42,784
$
$
5,825
38,067
(181)
-
43,711
4 Months Ended
November 30,2021
$
$
$
$
$
-
(927)
-
43,711
(927)
42,784
50.00%
21,392
21,392
(1) Based on financial information on the acquisition date of August 3, 2021.
(2)
Included in current assets are $2,525,000 in cash and cash equivalents, $2,322,000 in restricted cash, and $4,000 in accounts receivable
76
9. RESTRICTED CASH AND INVESTMENTS
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:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Cash and cash equivalents
Investments
Restricted cash and investments-by item:
Elliot Lake reclamation trust fund
Letters of credit facility pledged assets
Letters of credit additional collateral
At December 31
At December 31
2021
2020
$
$
$
$
2,866
9,135
12,001
2,866
9,000
135
12,001
$
$
$
$
2,883
9,135
12,018
2,883
9,000
135
12,018
At December 31, 2021 and December 31, 2020, investments consist of guaranteed investment certificates with
maturities of less than 90 days.
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 (“Reclamation Agreement”) with the Governments
of Canada and Ontario. The Reclamation 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.
In 2021, the Company deposited an additional $793,000 into the Elliot Lake reclamation trust fund and withdrew
$815,000. In 2020, the Company deposited an additional $803,000 into the Elliot Lake reclamation trust fund and
withdrew $811,000.
Letters of credit facility pledged assets
At December 31, 2021, the Company had $9,000,000 in cash on deposit with the Bank of Nova Scotia (“BNS”) as
pledged restricted cash and investments pursuant to its obligations under an amended and extended letters of
credit facility (see notes 14 and 16).
Letters of credit additional collateral
At December 31, 2021, the Company had an additional $135,000 of cash on deposit with BNS as collateral for the
portion of its issued reclamation letters of credit in excess of the amount available under its letters of credit facility
(see notes 14 and 16).
77
10. PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment (“PP&E”) continuity summary is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Cost:
Balance-January 1, 2020
Additions
Disposals
Reclamation adjustment (note 14)
Balance-December 31, 2020
Additions
Disposals
Recoveries
Reclamation adjustment (note 14)
Balance-December 31, 2021
Accumulated amortization, depreciation:
Balance-January 1, 2020
Amortization
Depreciation
Disposals
Reclamation adjustment (note 14)
Balance-December 31, 2020
Amortization
Depreciation
Disposals
Reclamation adjustment (note 14)
Balance-December 31, 2021
Carrying value:
Balance-December 31, 2020
Balance-December 31, 2021
Plant and Equipment - Owned
Plant and Equipment
Owned
Right-of-Use
Mineral
Properties
Total
PP&E
$
$
$
$
$
$
$
$
104,587 $
16
(60)
1,544
106,087 $
1,173
(466)
-
(1,111)
105,683 $
(27,518) $
(243)
(2,037)
60
243
(29,495) $
(280)
(2,391)
466
280
(31,420) $
906 $
26
(41)
-
891 $
83
(21)
-
-
953 $
(197) $
-
(198)
39
-
(356) $
-
(203)
17
-
(542) $
179,481 $
262
-
-
179,743 $
284,974
304
(101)
1,544
286,721
46
-
(1)
-
179,788 $
-
-
-
-
-
-
-
-
-
-
-
$
$
$
1,302
(487)
(1)
(1,111)
286,424
(27,715)
(243)
(2,235)
99
243
(29,851)
(280)
(2,594)
483
280
(31,962)
76,592 $
74,263 $
535 $
411 $
179,743 $
179,788 $
256,870
254,462
The Company has a 22.5% interest in the McClean Lake mill through its ownership interest in the MLJV. The
carrying value of the mill, comprised of various infrastructure, building and machinery assets, represents
$66,931,000, or 90.1%, of the December 2021 total carrying value amount of owned PP&E assets.
A toll milling agreement amongst the participants of the MLJV and the CLJV provides for the processing of certain
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 (Denison further has an agreement with APG regarding the receipt of
certain toll milling fees it receives from this toll milling agreement – see note 12). In determining the units of
production amortization rate for the McClean Lake mill, the amount of production attributable to the mill assets
includes Denison’s expected share of mill feed related to MLJV ores, MWJV ores and the CLJV toll milling contract.
Milling activities in 2021 at the McClean Lake mill included processing and packaging ore for the Cigar Lake mine
as well as from the test mining activities that occurred at the MLJV during the year. Milling activity in 2020 was
dedicated exclusively to processing and packaging ore from the Cigar Lake mine. Mill production in 2020 and
2021 was impacted by the COVID-19 pandemic. See note 12 for the current operating status of the McClean Lake
mill.
Plant and Equipment – Right-of-Use
The Company has included the cost of various right-of-use (“ROU”) assets within its plant and equipment ROU
carrying value amount. These assets consist of building, vehicle and office equipment leases. The majority of the
asset value is attributable to the building lease assets for the Company’s offices and warehousing space located
in Toronto and Saskatoon.
78
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Mineral Properties
The Company has various interests in development, evaluation and exploration projects located in Saskatchewan,
Canada, which are either held directly or through option or various contractual agreements. The following projects,
all located in Saskatchewan, represent $162,687,000, or 90.5%, of the carrying value amount of mineral property
assets as at December 31, 2021:
a) Wheeler River – the Company has a 90.0% direct interest in the project, and an additional 5.0% interest
through its investment in JCU (includes the Phoenix and Gryphon deposits);
b) Waterbury Lake – the Company has a 66.90% interest in the project (includes the THT and Huskie deposits)
and also has a 2.0% net smelter return royalty on the portion of the project it does not own;
c) Midwest – the Company has a 25.17% interest in the project (includes the Midwest Main and Midwest A
deposits);
d) Mann Lake – the Company has a 30.0% interest in the project;
e) Wolly – the Company has a 21.32% interest in the project;
f)
g) McClean Lake – the Company has a 22.5% interest in the project (includes the Sue D, Sue E, Caribou,
Johnston Lake – the Company has a 100% interest in the project; and
McClean North and McClean South deposits).
Wheeler River
On August 3, 2021, Denison completed the acquisition of 50% of JCU from UEX, for cash consideration plus
transaction costs of $21,856,000 (see note 8). JCU is a private company that holds a portfolio of twelve uranium
project joint venture interests in Canada, including a 10% interest in the WRJV, a 30.099% interest in the
Millennium project (Cameco Corporation 69.901%), a 33.8123% interest in the Kiggavik project (Orano Canada
Inc. 66.1877%), and a 34.4508% interest in the Christie Lake Project (UEX 65.5492%). The acquisition increased
the Company’s effective interest in the WRJV to 95.0%.
11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The accounts payable and accrued liabilities balance consists of:
(in thousands)
Trade payables
Payables in MLJV and MWJV
Other payables
12. DEFERRED REVENUE
The deferred revenue balance consists of:
(in thousands)
Deferred revenue-pre-sold toll milling:
CLJV Toll Milling-APG
Deferred revenue-by balance sheet presentation:
Current
Non-current
At December 31
At December 31
2021
2020
$
$
3,179 $
4,316
1,095
8,590 $
2,513
3,719
946
7,178
At December 31
At December 31
2021
2020
$
$
$
$
36,508
36,508
4,656
31,852
36,508
$
$
$
$
36,617
36,617
3,478
33,139
36,617
79
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
The deferred revenue liability continuity summary is as follows:
(in thousands)
2021
2020
Balance-January 1
Revenue earned during the period (note 22)
Accretion (note 21)
Balance-December 31
$
$
36,617
(3,207)
3,098
36,508
$
$
36,321
(2,762)
3,058
36,617
Arrangement with Anglo Pacific Group PLC (“APG”)
In February 2017, Denison closed an arrangement with APG under which Denison received an upfront payment
of $43,500,000 in exchange for its right to receive future toll milling cash receipts from the MLJV under the current
toll milling agreement with the CLJV from July 1, 2016 onwards. The up-front payment was based upon an estimate
of the gross toll milling cash receipts to be received by Denison discounted at a rate of 8.50%.
The APG Arrangement represents a contractual obligation of Denison to pay onward to APG any cash proceeds
of future toll milling revenue earned by the Company related to the processing of the specified Cigar Lake ore
through the McClean Lake mill. At closing, the Company made payments to APG of $3,520,000, representing the
Cigar Lake toll milling cash receipts received by Denison in respect of toll milling activity for the period from July 1,
2016 through January 31, 2017, and reflected those amounts as a reduction of the initial upfront amount received,
thereby reducing the initial deferred revenue balance to $39,980,000 at the transaction date.
In connection with the closing of the APG Arrangement, the terms of the BNS Letters of Credit Facility between
BNS and Denison were amended to reflect certain changes required to facilitate an Intercreditor Agreement
between APG, BNS and Denison (see note 16).
In 2021, the Company recognized $3,207,000 of toll milling revenue from the draw-down of deferred revenue,
based on Cigar Lake toll milling production of 12,159,000 pounds U3O8 (100% basis). The drawdown in 2021
includes a cumulative increase in revenue for prior periods of $61,000 resulting from changes in estimates to the
toll milling drawdown rate during 2021.
In 2020, the Company recognized $2,762,000 of toll milling revenue from the draw-down of deferred revenue,
based on Cigar Lake toll milling production of 10,069,000 pounds U3O8 (100% basis). The drawdown in 2020
includes a cumulative increase in revenue for prior periods of $168,000 resulting from changes in estimates to the
toll milling drawdown rate during 2020.
In response to the COVID-19 pandemic, the CLJV temporarily suspended production at the Cigar Lake mine from
the end of March 2020 until September 2020, and then again from the end of December 2020 until April 2021. The
MLJV temporarily suspended operations at the mill for the duration of the CLJV shutdowns.
The current portion of the deferred revenue liability reflects Denison’s estimate of Cigar Lake toll milling over the
next 12 months. This assumption is based on current mill packaged production expectations and is reassessed on
a quarterly basis.
13. 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. 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, 2020. 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 1.75%;
• Medical cost increase trend rate of 4.09% in 2020, grading up to 5.30% per year by 2026, staying flat at 5.30%
per year from 2026 to 2030 and then grading down to 4.05% per year from 2031 through to 2041; and
• Dental cost increase trend rate of 4.50% in 2020, grading up to 5.30% per year by 2026, staying flat at 5.30%
per year from 2026 to 2030 and then grading down to 4.05% per year from 2031 through to 2041.
80
The post-employment benefits balance consists of:
(in thousands)
Accrued benefit obligation
Post-employment benefits-by balance sheet presentation:
Current
Non-current
The post-employment benefits continuity summary is as follows:
(in thousands)
Balance-January 1
Accretion (note 21)
Benefits paid
Experience gain adjustment
Balance-December 31
14. RECLAMATION OBLIGATIONS
The reclamation obligations balance consists of:
(in thousands)
Reclamation obligations-by item:
Elliot Lake
MLJV and MWJV
Other
Reclamation obligations-by balance sheet presentation:
Current
Non-current
The reclamation obligations continuity summary is as follows:
(in thousands)
Balance-January 1
Accretion (note 21)
Expenditures incurred
Liability adjustments-income statement (note 21)
Liability adjustments-balance sheet (note 10)
Balance-December 31
Site Restoration: Elliot Lake
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
At December 31
At December 31
2021
2020
$
$
$
$
$
$
1,274
1,274
120
1,154
1,274
$
$
$
$
1,361
1,361
120
1,241
1,361
2021
2020
1,361
23
(110)
-
1,274
$
$
2,258
57
(90)
(864)
1,361
At December 31
At December 31
2021
2020
$
$
$
$
$
$
20,877
15,405
1,250
37,532
1,181
36,351
37,532
2021
38,420
1,343
(815)
(585)
(831)
37,532
$
$
$
$
$
$
21,523
16,875
22
38,420
802
37,618
38,420
2020
32,512
1,352
(826)
3,595
1,787
38,420
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,
81
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
based on assumptions as to what levels of treatment will be required in the future, discounted at 4.06% per annum
(December 31, 2020 - 3.50%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
costs, in current year dollars, is $35,837,000 (December 31, 2020 - $32,335,000). Revisions to the reclamation
liability for Elliot Lake are recognized in the income statement as the site is closed and there is no asset recognized
for this site.
Spending on restoration activities at the Elliot Lake site is funded by the Elliot Lake Reclamation Trust fund (see
note 9).
Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture
The MLJV and MWJV operations are subject to environmental regulations as set out by the Saskatchewan
government and the CNSC. Cost estimates of the expected 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 future reclamation costs discounted at 4.06% per annum
(December 31, 2020 - 3.50%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
costs, in current year dollars, is $24,617,000 (December 31, 2020 - $24,135,000). The majority of the reclamation
costs are expected to be incurred between 2038 and 2056. Revisions to the reclamation liabilities for the MLJV
and MWJV are recognized on the balance sheet as adjustments to the net reclamation assets associated with the
sites.
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 based on periodic filings of estimated
reclamation plans and the associated undiscounted future reclamation costs included therein. Accordingly, as at
December 31, 2021, the Company has in place irrevocable standby letters of credit, from a chartered bank, in
favour of the Saskatchewan Ministry of the Environment, totalling $24,135,000 which relate to the most recently
filed reclamation plan dated March 2016. See Note 27 for further details.
Site Restoration: Other
The Company’s exploration and evaluation activities are subject to environmental regulations as set out by the
Saskatchewan government. Cost estimates of the estimated future decommissioning and reclamation activities
are recognized when the liability is incurred. The accrual represents the Company’s best estimate of the present
value of the future reclamation cost contemplated in these cost estimates discounted at 4.06% per annum
(December 31, 2020 - nil%). As at December 31, 2021, the undiscounted amount of estimated future reclamation
costs, in current year dollars, is estimated at $1,562,000 (December 31, 2020 - $nil). Revisions to the reclamation
liabilities for exploration and evaluation activities are recognized on the balance sheet as adjustments to the net
reclamation assets associated with the respective properties.
15. SHARE PURCHASE WARRANTS LIABILITY
In connection with the public offerings of units in February 2021 and March 2021 (see note 18), the Company
issued 15,796,975 and 39,215,000 share purchase warrants to unit holders, respectively. The February 2021
warrants entitle the holder to acquire one common share of the Company at an exercise price of USD$2.00 for 24
months after issuance (February 2023). The March 2021 warrants entitle the holder to acquire one common share
of the Company at an exercise price of USD$2.25 for 24 months after issuance (March 2023).
Since these warrants are exercisable in U.S. dollars (“USD”), which differs from the Company’s CAD functional
currency, they are classified as derivative liabilities and are required to be carried as liabilities at FVTPL. When
the fair value of the warrants is revalued at each reporting period, the change in the liability is recorded through
net profit or loss in Other Income (expense).
February 2021 Warrants
The fair value of the February 2021 warrants was estimated to be $0.2215 on the date of issue, based on a relative
fair value basis approach, using a USD to CAD foreign exchange rate of 0.7928 and incorporating the following
assumptions in the Black-Scholes option pricing model – expected volatility of 67%, risk-free interest rate of 0.22%,
dividend yield of 0% and an expected term of 2 years.
At December 31, 2021, the fair value of the February 2021 warrants was estimated to be $0.4032, using a USD to
CAD foreign exchange rate of 0.7888 and incorporating the following assumptions in the Black-Scholes option
82
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
pricing model – expected volatility of 84%, risk-free interest rate of 0.91%, dividend yield of 0% and an expected
term of 1.13 years.
March 2021 Warrants
The fair value of the March 2021 warrants was estimated to be $0.2482 on the date of issue, based on a relative
fair value basis approach, using a USD to CAD foreign exchange rate of 0.7992 and incorporating the following
assumptions in the Black-Scholes option pricing model – expected volatility of 72%, risk-free interest rate of 0.27%,
dividend yield of 0% and an expected term of 2 years.
At December 31, 2021, the fair value of the March 2021 warrants was estimated to be $0.3563, using a USD to
CAD foreign exchange rate of 0.7888 and incorporating the following assumptions in the Black-Scholes option
pricing model – expected volatility of 82%, risk-free interest rate of 0.91%, dividend yield of 0% and an expected
term of 1.22 years.
The share purchase warrants liability continuity is as follows:
(in thousands except warrant amounts)
Balance-December 31, 2020
Share purchase warrants issued on February 19, 2021
Share purchase warrants issued on March 22, 2021
February 2021 warrants exercised
Fair value loss (note 21)
Balance-December 31, 2021
Number of
Warrants
-
15,796,975
39,215,000
(5,500)
-
55,006,475
$
$
Warrant
Liability
-
3,499
9,735
(1)
7,104
20,337
16. OTHER LIABILITIES
The other liabilities balance consists of:
(in thousands)
Debt obligations:
Lease obligations
Loan obligations
Flow-through share premium obligation (note 18)
Other liabilities-by balance sheet presentation:
Current
Non-current
At December 31
2021
At December 31
2020
$
$
$
$
452
56
-
508
179
329
508
$
$
$
$
582
33
22
637
262
375
637
83
Debt Obligations
At December 31, 2021, the Company’s debt obligations are comprised of lease and loan liabilities. The debt
obligations continuity summary is as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Balance-January 1, 2020
Accretion (note 21)
Additions
Repayments
Liability adjustment gain (note 21)
Balance-December 31, 2020
Accretion (note 21)
Additions
Repayments
Liability adjustment gain (note 21)
Balance-December 31, 2021
Lease
Liabilities
Loan
Liabilities
Total Debt
Obligations
$
$
$
739 $
56
26
(237)
(2)
582 $
44
71
(241)
(4)
452 $
263 $
-
-
(230)
-
33 $
-
34
(11)
-
56 $
1,002
56
26
(467)
(2)
615
44
105
(252)
(4)
508
Debt Obligations – Scheduled Maturities
The following table outlines the Company’s scheduled maturities of its debt obligations at December 31, 2021:
(in thousands)
Maturity analysis-contractual undiscounted cash flows:
Next 12 months
One to five years
More than five years
Total obligation-end of period-undiscounted
Present value discount adjustment
Total obligation-end of period-discounted
Letters of Credit Facility
Lease
Liabilities
Loan
Liabilities
Total Debt
Obligations
$
$
162 $
359
-
521
(69)
452 $
17 $
43
-
60
(4)
56 $
179
402
-
581
(73)
508
In 2021, the Company had a facility in place with BNS for credit of up to $24,000,000 with a one year term and a
maturity date of January 31, 2022 (the “2021 Facility”). Use of the 2021 Facility is restricted to non-financial letters
of credit in support of reclamation obligations.
The 2021 Facility contains a covenant to maintain a level of tangible net worth greater than or equal to the sum of
$131,000,000 and a pledge of $9,000,000 in restricted cash and investments as collateral for the facility (see note
9). As additional security for the 2021 Facility, DMC has provided an unlimited full recourse guarantee and a pledge
of all of the shares of Denison Mines Inc. (“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 MLJV and MWJV projects. The 2021 Facility is subject to letter of credit fees of 2.40% (0.40% on the
$9,000,000 covered by pledged cash collateral) and standby fees of 0.75%.
At December 31, 2021, the Company was in compliance with its 2021 Facility covenants and $24,000,000 of the
2021 Facility was being utilized as collateral for certain letters of credit (December 31, 2020 - $24,000,000). During
2021, the Company incurred letter of credit and standby fees of $397,000 (2020 - $398,000).
In January 2022, the Company entered into an agreement with BNS to amend the terms of the 2021 Facility to
extend the maturity date to January 31, 2023 (see note 27).
84
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
17. INCOME TAXES
The income tax recovery balance from continuing operations consists of:
(in thousands)
Deferred income tax:
Origination of temporary differences
Tax benefit-previously unrecognized tax assets
Prior year over (under) provision
Income tax recovery
2021
2020
$
$
1,795
247
(47)
1,995
1,995
$
$
710
1,255
(1,105)
860
860
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)
Income (loss) before taxes
Combined Canadian tax rate
Income tax (expense) recovery at combined rate
Difference in tax rates
Non-deductible amounts
Non-taxable amounts
Previously unrecognized deferred tax assets (1)
Renunciation of tax attributes-flow through shares
Change in deferred tax assets not recognized
Change in tax rates, legislation
Prior year over (under) provision
Other
Income tax recovery
2021
2020
$
16,982
26.50%
(4,500)
(17,143)
26.50%
4,543
(1,704)
(4,637)
13,518
247
(423)
(233)
(29)
(47)
(197)
1,995
$
1,746
(2,579)
2,535
1,255
(417)
(5,960)
(55)
(1,105)
897
860
$
$
(1) The Company has recognized certain previously unrecognized Canadian tax assets in 2021 and 2020 as a result of the renunciation of certain
tax benefits to subscribers pursuant to its December 2020 $930,000 and December 2019 $4,715,000 flow-through share offerings.
85
The deferred income tax assets (liabilities) balance reported on the balance sheet is comprised of the temporary
differences as presented below:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Deferred income tax assets:
Property, plant and equipment, net
Post-employment benefits
Reclamation obligations
Non-capital tax loss carry forwards
Capital loss carry forward
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
Property, plant and equipment, net
Investments-equity instruments and uranium
Other
Deferred income tax liabilities-gross
Set-off of deferred income tax assets
Deferred income tax liabilities-per balance sheet
The deferred income tax liability continuity summary is as follows:
(in thousands)
Balance-January 1
Recognized in income (loss)
Recognized in other liabilities (flow-through shares)
Recognized in other comprehensive income
Balance-December 31
At December 31
2021
At December 31
2020
$
$
$
$
$
$
$
387
331
11,420
16,910
6,862
7,942
43,852
(43,852)
-
$
$
(755)
(42,322)
(6,862)
(1,132)
(51,071)
43,852
(7,219) $
387
355
11,709
16,943
-
7,747
37,141
(37,141)
-
(757)
(44,436)
-
(1,140)
(46,333)
37,141
(9,192)
2021
2020
(9,192) $
1,995
(22)
-
(7,219) $
(8,924)
860
(902)
(226)
(9,192)
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
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
2021
At December 31
2020
$
$
4,022
58,312
51,353
1,126
5,023
119,836
$
$
4,744
66,873
42,635
1,126
1,441
116,819
86
The expiry dates of the Company’s Canadian operating tax losses and tax credits are as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Tax losses-gross
Tax benefit at tax rate of 26% - 27%
Set-off against deferred tax liabilities
Total tax loss assets not recognized
Tax credits
Total tax credit assets not recognized
2025-2035
18. SHARE CAPITAL
Expiry
Date
At December 31
2021
At December 31
2020
2025-2041
$
251,967
$
220,039
68,263
(16,910)
51,353
1,126
1,126
$
$
$
$
59,578
(16,943)
42,635
1,126
1,126
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:
(in thousands except share amounts)
Balance-January 1, 2020
Issued for cash:
Unit issue proceeds-total
Unit issue costs-total
Share option exercises
Share option exercises-transfer from contributed surplus
Share unit exercises-transfer from contributed surplus
Flow-through share premium liability (note 16)
Balance-December 31, 2020
Issued for cash:
Unit issue proceeds-total
Less: allocation to share purchase warrants liability (note 15)
Unit issue costs-total
Less: allocation to share purchase warrants issue expense
Other share issue proceeds-total
Less: other share issue costs
Share option exercises
Share purchase warrant exercises
Share option exercises-transfer from contributed surplus
Share unit exercises-transfer from contributed surplus
Share purchase warrant exercises-warrant liability settled
Balance-December 31, 2021
Unit and Other Share Issues
Number of
Common
Shares
597,192,153 $
1,335,467
81,179,280
-
251,500
-
358,949
-
81,789,729
678,981,882 $
110,023,950
-
-
-
13,996,486
-
8,451,848
5,500
-
970,329
-
133,448,113
812,429,995 $
33,933
(3,108)
148
50
242
(22)
31,243
1,366,710
144,214
(13,234)
(8,584)
791
19,889
(1,798)
6,300
14
2,157
566
4
150,319
1,517,029
In April 2020, the Company completed a public offering of 28,750,000 common shares at a price of USD$0.20 per
share for gross proceeds of $8,041,000 (USD$5,750,000). The offering included the full exercise of an over-
allotment option of 3,750,000 common shares granted to the underwriters.
In October 2020, the Company completed a public offering of 51,347,321 common shares at a price of USD$0.37
per share for gross proceeds of approximately $24,962,000 (USD$18,999,000), which included the partial exercise
by the underwriters of their over-allotment option.
In December 2020, Denison completed a private placement of 1,081,959 flow-through common shares at a price
87
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
of $0.86 per share for gross proceeds of $930,485. The income tax benefits of this issue were renounced to
subscribers with an effective date of December 31, 2020. The related flow-through share premium liabilities are
included as a component of other liabilities on the balance sheet at December 31, 2020 and were extinguished in
2021 when the tax benefit was renounced to the shareholders (see note 16).
In January and February 2021, Denison, through its agents, issued 4,230,186 common shares under its at-the-
market (“ATM”) program that was established pursuant to the equity distribution agreement dated November 13,
2020 (“2020 ATM Program”) and qualified by a prospectus supplement to its short form base shelf prospectus
dated June 2, 2020 (“2020 Shelf Prospectus”). The common shares were issued at an average price of $0.93 per
share for aggregate gross proceeds of $3,914,000. The Company also recognized issue costs of $466,000 related
to its ATM share issuances, which includes $78,000 of commissions and $384,000 associated with the set-up of
the 2020 ATM Program, which were previously deferred on the balance sheet and included in Prepaid expenses
and other at December 31, 2020. In connection with the public offering completed on March 22, 2021 (see below),
the Company terminated its 2020 ATM Program.
On February 19, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020
Shelf Prospectus of 31,593,950 units of the Company at USD$0.91 per unit for gross proceeds of $36,265,000
(USD$28,750,000), including the full exercise of the underwriters’ over-allotment option of 4,120,950 units. Each
unit consisted of one common share and one-half of one transferable common share purchase warrant of the
Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of
USD$2.00 for 24 months after issuance. A portion of the gross proceeds ($3,499,000 – see note 15) has been
allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs
associated with the offering has been expensed within Other expense (see note 21).
On March 3, 2021, the Company completed a private placement of 5,926,000 flow-through common shares at a
price of $1.35 per share for gross proceeds of approximately $8,000,000. The income tax benefits of this issue
were renounced to subscribers with an effective date of December 31, 2021. The related flow-through share
premium liability was valued at $nil as the issue price was less than the Company’s observed share price on the
date of issue.
On March 22, 2021, the Company completed a public offering by way of a prospectus supplement to the 2020
Shelf Prospectus of 78,430,000 units of the Company at USD$1.10 per unit for gross proceeds of $107,949,000
(USD$86,273,000), including the full exercise of the underwriters’ over-allotment option of 10,230,000 units. Each
unit consisted of one common share and one-half of one transferable common share purchase warrant of the
Company. Each full warrant is exercisable to acquire one common share of the Company at an exercise price of
USD$2.25 for 24 months after issuance. A portion of the gross proceeds ($9,735,000 – see note 15) has been
allocated to share warrant liabilities on a relative fair value basis and the pro-rata share of the issue costs
associated with the offering has been expensed within Other expense (see note 21).
On September 16, 2021, the Company filed a short form base shelf prospectus with the securities’ regulatory
authorities in each of the provinces and territories in Canada and a registration statement on Form F-10 in the
United States (“2021 Shelf Prospectus”). Under the 2021 Shelf Prospectus, the Company is qualified to issue
securities, in amounts, at prices, and on terms to be determined based on market conditions at the time of sale
and as set forth in the 2021 Shelf Prospectus, for an aggregate offering amount of up to $250,000,000 during the
25-month period ending on October 16, 2023.
On September 28, 2021, Denison entered into an equity distribution agreement providing for an ATM equity offering
program qualified by a prospectus supplement to the 2021 Shelf Prospectus (“2021 ATM Program”). The 2021
ATM Program will allow Denison, through its agents, to, from time to time, offer and sell, in Canada and the United
States, such number of common shares as would have an aggregate offering price of up to USD$50,000,000. As
of December 31, 2021, the Company issued 3,840,000 shares under the 2021 ATM Program. The common shares
were issued at an average price of $2.08 per share for aggregate gross proceeds of $7,975,000. The Company
also recognized issue costs of $748,000 related to its ATM share issuances which includes $160,000 of
commissions and $588,000 associated with the set-up and maintenance of the 2021 Shelf Prospectus and 2021
ATM Program.
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, 2021, the Company estimates that it has satisfied its obligation to spend $930,485 on eligible
88
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
exploration expenditures in fiscal 2021 in connection with the issuance of flow-through shares in December 2020.
The Company renounced the income tax benefits of this issue in February 2021, with an effective date of
renunciation to its subscribers of December 31, 2020. In conjunction with the renunciation, the flow-through share
premium liability at December 31, 2020 has been extinguished and a deferred tax recovery has been recognized
in the first quarter of 2021 (see note 17).
As at December 31, 2021, the Company estimates that it has incurred $2,283,000 of expenditures towards its
obligation to spend $8,000,000 on eligible exploration expenditures by the end of fiscal 2022 in connection with
the issuance of flow-through shares in March 2021.
19. SHARE-BASED COMPENSATION
The Company’s share-based compensation arrangements include share options, restricted share units (“RSUs”)
and performance share units (“PSUs”).
A summary of share-based compensation expense recognized in the statement of income (loss) is as follows:
(in thousands)
2021
2020
Share-based compensation expense for:
Share options
RSUs
PSUs
Share based compensation expense
$
$
(1,383) $
(1,435)
(14)
(2,832) $
(559)
(1,034)
(234)
(1,827)
An additional $2,382,000 in share-based compensation expense remains to be recognized, up until November
2024, on options and share units outstanding at December 31, 2021.
Share Options
The Company’s Share Option Plan provides for the granting of share 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 of
December 31, 2021, an aggregate of 26,226,093 options (December 31, 2020 - 23,401,593) have been granted
(less cancellations) since the Plan’s inception in 1997.
Under the Share Option Plan, all share options are granted at the discretion of the Company’s board of directors,
including any vesting provisions if applicable. The term of any share 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, share options granted under the Share Option Plan have five-
year terms and vesting periods up to 24 months.
A continuity summary of the share options of the Company granted under the Share Option Plan for 2021 and
2020 is presented below:
2021
2020
Weighted
Average
Exercise
Price per
Share
(CAD)
Number of
Common
Shares
Number of
Common
Shares
Weighted
Average
Exercise
Price per
Share
(CAD)
Share options outstanding-January 1
Grants
Exercises (1)
Expiries
Forfeitures
Share options outstanding-December 31
Share options exercisable-December 31
15,077,243 $
4,171,000
(8,451,848)
(31,000)
(1,315,500)
9,449,895 $
4,370,895 $
0.67
1.30
0.75
0.66
0.79
0.86
0.61
13,827,243 $
3,671,000
(251,500)
(1,424,000)
(745,500)
15,077,243 $
10,289,743 $
0.75
0.46
0.59
0.97
0.67
0.67
0.74
(1) The weighted average share price at the date of exercise was CAD$1.49 (December 31, 2020 - CAD$0.72).
89
A summary of the Company’s share options outstanding at December 31, 2021 is presented below:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Range of Exercise
Prices per Share
(CAD)
Share options outstanding
$ 0.25 to $ 0.49
$ 0.50 to $ 0.74
$ 0.75 to $ 0.99
$ 1.00 to $ 1.49
$ 1.50 to $ 1.99
$ 2.00 to $ 2.49
Share options outstanding-December 31, 2021
Weighted
Average
Remaining
Contractual
Life
(Years)
Weighted-
Average
Exercise
Price per
Share
(CAD)
Number of
Common
Shares
3.21
1.69
0.19
4.20
-
4.87
3.01
2,354,500 $
3,054,395
331,000
3,606,000
-
104,000
9,449,895 $
0.45
0.64
0.85
1.28
-
2.29
0.86
Share options outstanding at December 31, 2021 expire between March 2022 and November 2026.
The fair value of each share option granted is estimated on the date of grant using the Black-Scholes option pricing
model. The following table outlines the assumptions used in the model to determine the fair value of share options
granted:
Risk-free interest rate
Expected share price volatility
Expected life
Estimated forfeiture rate
Expected dividend yield
Fair value per option granted
2021
2020
0.70% - 1.29%
66.11% - 73.37%
3.4 years
3.13% - 3.91%
–
CAD$0.59 - CAD$1.22
0.27% - 0.67%
44.16% - 54.16%
3.4 years
2.84% - 3.08%
–
CAD$0.15 - CAD$0.25
The fair values of share options with vesting provisions are amortized on a graded method basis as share-based
compensation expense over the applicable vesting periods.
Share Units
The Company has a share unit plan which provides for the granting of share unit awards to directors, officers and
employees of the Company, in the form of RSUs or PSUs. The maximum number of share units that are issuable
under the share unit plan is 15,000,000. Each share unit represents the right to receive one common share from
treasury, subject to the satisfaction of various time and / or performance conditions.
Under the plan, all share unit grants, vesting periods and performance conditions therein are approved by the
Company’s board of directors. RSUs granted under the plan, to date, vest ratably over a period of three years.
PSUs granted under the plan, to date, vest ratably based upon the achievement of certain non-market performance
vesting conditions. PSUs granted in 2018 vest ratably over a period of five years, PSUs granted in 2019 vest
ratably over a period of four years and PSUs granted in 2020 vest ratably over a period of three years. No PSUs
were granted in 2021.
90
A continuity summary of the RSUs of the Company granted under the share unit plan for 2021 and 2020 is
presented below:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
2021
2020
Weighted
Average
Fair Value
Per RSU
(CAD)
Number of
Common
Shares
Number of
Common
Shares
Weighted
Average
Fair Value
Per RSU
(CAD)
5,691,899 $
1,958,000
(760,329)
(1,087,729)
5,801,841 $
1,997,677 $
0.52
1.44
0.56
0.63
0.80
0.59
2,754,099 $
3,345,750
(238,949)
(169,001)
5,691,899 $
970,670 $
0.70
0.38
0.69
0.59
0.52
0.69
RSUs outstanding-January 1
Grants
Exercises (1)
Forfeitures
RSUs outstanding-December 31
RSUs vested-December 31
(1) The weighted average share price at the date of exercise was CAD$1.54 (December 31, 2020 - CAD$0.56).
A continuity summary of the PSUs of the Company granted under the share unit plan for 2021 and 2020 is
presented below:
2021
2020
Weighted
Average
Fair Value
Per PSU
(CAD)
Number of
Common
Shares
2,020,000 $
-
(210,000)
(280,000)
1,530,000 $
870,000 $
0.63
-
0.66
0.68
0.62
0.63
Number of
Common
Shares
Weighted
Average
Fair Value
Per PSU
(CAD)
2,140,000 $
180,000
(120,000)
(180,000)
2,020,000 $
700,000 $
0.65
0.38
0.65
0.65
0.63
0.65
PSUs outstanding-January 1
Grants
Exercises (1)
Forfeitures
PSUs outstanding-December 31
PSUs vested-December 31
(1) The weighted average share price at the date of exercise was CAD$1.41 (December 31, 2020 - CAD$0.67).
The fair value of each RSU and PSU granted is estimated on the date of grant using the Company’s closing share
price on the day before the grant date.
20. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The accumulated other comprehensive income balance consists of:
(in thousands)
Cumulative foreign currency translation
Experience gains-post employment liability
Gross
Tax effect
At December 31
2021
At December 31
2020
$
$
414
$
413
1,847
(485)
1,776
$
1,847
(485)
1,775
91
21. SUPPLEMENTAL FINANCIAL INFORMATION
The components of operating expenses are as follows:
(in thousands)
2021
2020
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Cost of goods and services sold:
Cost of goods sold-mineral concentrates
Operating Overheads:
Mining, other development expense
Milling, conversion expense
Less absorption:
- Mineral properties
- Milling
Cost of services-Closed Mines Services
Cost of goods and services sold
Reclamation asset amortization
Selling expenses
Sales royalties and non-income taxes
Operating expenses
The components of other income (expense) are as follows:
(in thousands)
Gains (losses) on:
Foreign exchange
Disposal of property, plant and equipment
Fair value changes:
Investments-equity instruments (note 7)
Investments-uranium (note 7)
Warrants on investment (note 7)
Share purchase warrants (note 15)
Share purchase warrants issue expense (note 18)
Reclamation obligation adjustments (note 14)
Uranium investment carrying charges
Debt obligation adjustments (note 16)
Legal settlement (note 25)
Other
$
- $
(526)
(2,630)
(2,697)
46
451
(7,791)
(12,621)
(280)
-
-
$
(12,901) $
(1,165)
(1,769)
39
-
(6,852)
(10,273)
(243)
(14)
(64)
(10,594)
2021
2020
$
(1,295) $
135
(529)
405
10,454
41,440
1,149
(7,104)
(791)
585
(223)
4
-
(191)
44,163 $
5,046
-
-
-
-
(3,595)
-
2
(850)
(574)
(95)
Other income (expense)
$
The components of finance income (expense) are as follows:
(in thousands)
Interest income
Interest expense
Accretion expense:
Deferred revenue (note 12)
Post-employment benefits (note 13)
Reclamation obligations (note 14)
Debt obligations (note 16)
Finance expense, net
2021
2020
$
383 $
(2)
291
(4)
(3,098)
(23)
(1,343)
(44)
(4,127) $
(3,058)
(57)
(1,352)
(56)
(4,236)
$
92
A summary of depreciation expense recognized in the statement of income (loss) is as follows:
(in thousands)
2021
2020
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Operating expenses:
Mining, other development expense
Milling, conversion expense
Cost of services
Exploration
Evaluation
General and administrative
Depreciation expense-gross
$
$
(2) $
(2,053)
(179)
(180)
(36)
(114)
(2,564) $
(3)
(1,730)
(192)
(148)
(36)
(126)
(2,235)
A summary of employee benefits expense recognized in the statement of income (loss) is as follows:
(in thousands)
Salaries and short-term employee benefits
Share-based compensation (note 19)
Termination benefits
Employee benefits expense-gross
2021
2020
$
$
(9,358) $
(2,832)
(125)
(12,315) $
(7,405)
(1,827)
(35)
(9,267)
A summary of lease related amounts recognized in the statement of income (loss) is as follows:
(in thousands of CAD dollars)
2021
2020
Accretion expense on lease liabilities
Expenses relating to short-term leases
Expenses relating to non-short term low-value leases
Lease related expense-gross
$
$
(44) $
(3,920)
(6)
(3,970) $
(56)
(2,287)
(13)
(2,356)
The change in non-cash operating working capital items in the consolidated statements of cash flows is as follows:
(in thousands)
2021
2020
Change in non-cash working capital items:
Trade and other receivables
Inventories
Prepaid expenses and other assets
Accounts payable and accrued liabilities
Change in non-cash working capital items
$
$
(282) $
(410)
(183)
676
(199) $
649
220
(422)
(754)
(307)
The supplemental cash flow disclosure required for the consolidated statements of cash flows is as follows:
(in thousands)
2021
2020
Supplemental cash flow disclosure:
Interest paid
Income taxes paid
$
(2) $
-
(4)
-
22. SEGMENTED INFORMATION
Business Segments
The Company operates in three primary segments – the Mining segment, the Closed Mine Services segment and
the Corporate and Other segment. The Mining segment includes activities related to exploration, evaluation and
development, mining, milling (including toll milling) and the sale of mineral concentrates. The Closed Mine Services
segment includes the results of the Company’s environmental services business which provides mine
93
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
decommissioning and other services to third parties. The Corporate and Other segment includes management fee
income earned from UPC and general corporate expenses not allocated to the other segments. Management fee
income has been included in the same segment as general corporate expenses due to the shared infrastructure
between the two activities.
For the year ended December 31, 2021, reportable segment results were as follows:
(in thousands)
Statement of Operations:
Revenues
Expenses:
Operating expenses
Exploration
Evaluation
General and administrative
Segment income (loss)
Revenues-supplemental:
Environmental services
Management fees
Toll milling services-deferred revenue (note 12)
Closed
Mines
Services
Mining
Corporate
and Other
Total
3,207
8,829
7,964
20,000
(5,110)
(4,477)
(15,521)
(19)
(25,127)
(21,920)
-
-
3,207
3,207
(7,791)
-
-
-
(7,791)
1,038
8,829
-
-
8,829
-
-
-
(9,672)
(9,672)
(1,708)
-
7,964
-
7,964
(12,901)
(4,477)
(15,521)
(9,691)
(42,590)
(22,590)
8,829
7,964
3,207
20,000
Capital additions:
Property, plant and equipment (note 10)
1,009
102
191
1,302
Long-lived assets:
Plant and equipment
Cost
Accumulated depreciation
Mineral properties
101,392
(28,542)
179,788
252,638
4,182
(2,907)
-
1,275
1,062
(513)
-
549
106,636
(31,962)
179,788
254,462
94
For the year ended December 31, 2020, reportable segment results were as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Statement of Operations:
Revenues
Expenses:
Operating expenses
Exploration
Evaluation
General and administrative
Segment income (loss)
Revenues-supplemental:
Uranium concentrate sales
Environmental services
Management fees
Toll milling services-deferred revenue (note 12)
Closed
Mines
Services
Mining
Corporate
and Other
Total
3,614
8,205
2,604
14,423
(3,742)
(5,314)
(3,718)
(19)
(12,793)
(9,179)
852
-
-
2,762
3,614
(6,849)
-
-
-
(6,849)
1,356
-
8,205
-
-
8,205
(3)
-
-
(7,590)
(7,593)
(4,989)
-
-
2,604
-
2,604
(10,594)
(5,314)
(3,718)
(7,609)
(27,235)
(12,812)
852
8,205
2,604
2,762
14,423
Capital additions:
Property, plant and equipment (note 10)
289
15
-
304
Long-lived assets:
Plant and equipment
Cost
Accumulated depreciation
Mineral properties
Revenue Concentration
101,540
(26,241)
179,743
255,042
4,546
(3,194)
-
1,352
892
(416)
-
476
106,978
(29,851)
179,743
256,870
The Company’s business is such that, at any given time, it sells its environmental and other services to a relatively
small number of customers. During 2021, one customer from the Corporate and Other segment, two customers
from Closed Mines Services segment and one customer from the Mining segment accounted for approximately
100% of total revenues consisting of 40%, 44% and 16% respectively. During 2020, one customer from the
Corporate and Other segment, three customers from the Closed Mine Services segment and one customer from
the Mining segment accounted for approximately 94% of total revenues consisting of 18%, 57% and 19%
respectively.
Revenue Commitments
Denison’s revenue portfolio consists of short and long-term sales commitments. The following table summarizes
the expected future revenue, by segment, based on the customer contract commitments and information that exists
as at December 31, 2021:
(in thousands)
Revenues-by Segment:
Closed Mines Services
Environmental services
Total Revenue Commitments
2022
2023
2024
2025
There-
after
Total
7,218
7,218
3,301
3,301
-
-
-
-
-
-
10,519
10,519
The amounts in the table above represent the estimated consideration that Denison will be entitled to receive when
it satisfies the remaining performance obligations in its customer contracts. Various assumptions, consistent with
95
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
past experience, have been made where the quantity of the performance obligation may vary.
In addition to the amounts disclosed above, the Company is also contracted to pay onward to APG all toll milling
cash proceeds received from the MLJV related to the processing of specified Cigar Lake ore through the McClean
Lake mill (see note 12). The timing and amount of such future toll milling cash proceeds are outside the control of
the Company.
23. RELATED PARTY TRANSACTIONS
Uranium Participation Corporation
UPC was a publicly-listed investment holding company which invested substantially all of its assets in uranium
oxide concentrates (“U3O8”) and uranium hexafluoride (“UF6”). The Company had no ownership interest in UPC
but received fees for management services it provided and commissions from the purchase and sale of U3O8 and
UF6 by UPC.
The Company entered into a management services agreement (“MSA”) with UPC effective April 1, 2019 with a
term of five years (the “Term”). Under the MSA, Denison received the following management fees from UPC: a)
a base fee of $400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per
annum of UPC’s total assets in excess of $100 million and up to and including $500 million, and (ii) 0.2% per
annum of UPC’s total assets in excess of $500 million; c) a fee, at the discretion of the Board, for on-going
monitoring or work associated with a transaction or arrangement (other than a financing, or the acquisition of or
sale of U3O8 or UF6); and d) a commission of 1.0% of the gross value of any purchases or sales of U3O8 or UF6 or
gross interest fees payable to UPC in connection with any uranium loan arrangements.
On July 19, 2021, UPC and Sprott completed the UPC Transaction and the MSA between Denison and UPC was
terminated in accordance with the termination provisions therein. As a result, Denison received a termination
payment from UPC of $5,848,000.
As at December 31, 2021, UPC is no longer considered a related party of Denison.
The following transactions were incurred with UPC for the periods noted:
(in thousands)
Management fees:
Base and variable fees
Discretionary fees
Commission fees
Termination fee
2021
2020
$
$
1,069 $
350
697
5,848
7,964 $
2,011
300
293
-
2,604
At December 31, 2021, accounts receivable includes $nil (December 31, 2020: $265,000) due from UPC with
respect to the fees and transactions indicated above.
Korea Electric Power Corporation (“KEPCO”) and Korea Hydro & Nuclear Power (“KHNP”)
In connection with KEPCO’s investment in Denison in June 2009, KEPCO and Denison became parties to a
strategic relationship agreement. 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
subsidiary, KHNP. In September 2017, Denison and KHNP’s affiliate entered into an amended and restated
strategic relationship agreement, in large part providing KHNP’s affiliate with the same rights as those previously
given to KEPCO under the prior agreement, including entitling KHNP’s affiliate to: (a) subscribe for additional
common shares in Denison’s future public equity offerings; (b) a right of first opportunity if Denison intends to sell
any of its substantial assets; (c) a right to participate in certain purchases of substantial assets which Denison
proposes to acquire; and (d) 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, 2021, KEPCO, through its subsidiaries, holds 58,284,000 shares of Denison representing
approximately 7.17% of Denison’s issued and outstanding shares. KHNP Canada Energy Ltd (“KHNP Canada”),
a subsidiary of KHNP, is the holder of the majority of the shares.
96
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
KHNP Canada is also the majority member of the Korea Waterbury Uranium Limited Partnership (“KWULP”).
KWULP is a consortium of investors that holds the non-Denison owned interests in Waterbury Lake Uranium
Corporation (“WLUC”) and the WLULP, entities whose key asset is the Waterbury Lake property. At December 31,
2021, WLUC is owned by Denison Waterbury Corp (60%) and KWULP (40%) while the WLULP is owned by
Denison Waterbury Corp (66.90% - limited partner), KWULP (33.09% - limited partner) and WLUC (0.02% - general
partner). When a spending program is approved, each participant is required to fund these entities based upon its
respective ownership interest or be diluted accordingly. Spending program approval requires 75% of the limited
partners’ 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 delayed until
September 30, 2015 and then applied in each subsequent period, if applicable, in accordance with the original
agreements. In exchange, Denison received authorization to approve spending programs on the property, up to
an aggregate $10,000,000, until September 30, 2016 without obtaining approval from 75% of the voting interest.
Under subsequent amendments, Denison and KWULP have agreed to extend Denison’s authorization under the
Dilution Agreement to approve program spending up to an aggregate $15,000,000 until December 31, 2022.
In 2021, there was no active exploration program for Waterbury Lake, and therefore the Company’s ownership
interest in WLULP did not change.
In 2020, Denison funded 100% of the approved fiscal 2020 program for Waterbury Lake and KWULP continued to
dilute its interest in the WLULP. As a result, Denison increased its interest in the WLULP from 66.57% to 66.90%,
in two steps, which was accounted for using effective dates of June 30, 2020 and November 30, 2020. The
increased ownership interest resulted in Denison recording its increased pro-rata share of the assets and liabilities
of Waterbury Lake, the majority of which relates to an addition to mineral property assets of $223,000.
Other
During 2021, the Company incurred investor relations, administrative service fees and certain pass-through
expenses of $164,000 (2020: $206,000) with Namdo Management Services Ltd (“Namdo”), a company of which a
former director of Denison is a shareholder. These services were incurred in the normal course of operating a
public company. As at December 31, 2021, Namdo is no longer considered a related party of Denison.
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
Key management personnel compensation
2021
2020
$
$
(2,546) $
(2,277)
(4,823) $
(1,899)
(1,507)
(3,406)
24. CAPITAL MANAGEMENT AND FINANCIAL RISK
Capital Management
The Company’s capital includes cash, cash equivalents, investments in debt instruments, investments in equity
instruments and the current portion of 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 to
shareholders and benefits for other stakeholders, and to pursue growth opportunities.
Long-term 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 business
units based on a system of internal controls that require review and approval of significant expenditures by the
Company’s key decision makers. Under the Company’s delegation of authority guidelines, significant debt
obligations require the approval of the Board of Directors.
97
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
The Company monitors and reviews the composition of its net cash and investment position on an ongoing basis,
and adjusts its holdings as necessary to achieve the desired level of risk and/or to accommodate operating plans
for the current and future periods.
The Company’s net cash and investment position is summarized below:
(in thousands)
Net cash and investments:
Cash and cash equivalents
Equity instrument investments (note 7)
Investments-uranium (note 7)
Debt obligations-current (note 16)
Net cash and investments
Financial Risk
At December 31
At December 31
2021
2020
$
$
63,998
14,578
133,114
(179)
211,511
$
$
24,992
16,950
-
(240)
41,702
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 commodity price
and equity 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 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
Restricted cash and investments
At December 31 At December 31
2021
2020
$
$
63,998 $
3,656
12,001
79,655 $
24,992
3,374
12,018
40,384
The Company limits cash and cash equivalents and restricted cash and investment risk by dealing with credit
worthy financial institutions. The majority of the Company’s normal course trade and other receivables balance
relates to a small number of customers who have established credit worthiness with the Company through past
dealings. Based on its historical credit loss experience, the Company has recorded an allowance for credit loss of
$nil as at December 31, 2021 and December 31, 2020.
(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 and equity
investments, its financial covenants, and its access to credit and capital markets, if required.
98
The maturities of the Company’s financial liabilities at December 31, 2021 are as follows:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Accounts payable and accrued liabilities
Debt obligations (note 16)
(c) Currency Risk
Within 1
Year
$
$
8,590
179
8,769
$
$
1 to 5
Years
-
329
329
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. The Company predominantly operates in Canada and incurs the
majority of its operating and capital costs in Canadian dollars.
As the prices of uranium are quoted in U.S. currency, fluctuations in the Canadian dollar relative to the U.S. dollar
can significantly impact the valuation of the Company’s holdings of physical uranium from a Canadian dollar
perspective.
The Company is also exposed to some foreign exchange risk on its net U.S dollar financial asset position, including
cash and cash equivalents held in U.S. dollars.
At December 31, 2021, the Company’s net U.S dollar financial assets and uranium investments were $8,697,000,
and $133,114,000, respectively. The impact of the U.S dollar strengthening or weakening (by 10%) on the value
of the Company’s net U.S dollar-denominated assets is as follows:
(in thousands except foreign exchange rates)
Currency risk
CAD weakens
CAD strengthens
December 31
Sensitivity
2021
Foreign
Exchange
Rate
Foreign
Exchange
Rate
Change in
net income
(loss)
1.2678
1.2678
1.3945
1.1410
$
$
14,181
(14,181)
Currently, the Company does not have any programs or instruments in place to hedge this possible currency risk.
(d) Interest Rate Risk
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) Commodity Price Risk
The Company’s uranium holdings are directly tied to the spot price of uranium. At December 31, 2021, a 10%
increase in the uranium spot price would have increased the Company’s holdings of physical uranium by
$13,311,000, while a 10% decrease would have decreased the Company’s holdings of physical uranium by
$13,311,000.
99
(f) Equity Price Risk
The Company is exposed to equity price risk on its investments in equity instruments of other publicly traded
companies as well as on the GoviEx Warrants. The sensitivity analysis below illustrates the impact of equity price
risk on the equity investments held by the Company and the GoviEx Warrants at December 31, 2021:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Equity price risk
10% increase in equity prices
10% decrease in equity prices
Change in
net income
(loss)
$
1,049
(1,080)
Fair Value of Investments and Financial Instruments
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a
hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
•
•
•
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;
and
Level 3 - Inputs that are not based on observable market data.
The fair value of financial instruments which trade in active markets, such as share and warrant equity instruments,
is based on quoted market prices at the balance sheet date. The quoted market price used to value financial assets
held by the Company is the current closing price. Warrants that do not trade in active markets have been valued
using the Black-Scholes pricing model. Debt instruments have been valued using the effective interest rate for the
period that the Company expects to hold the instrument and not the rate to maturity.
Except as otherwise disclosed, the fair values of cash and cash equivalents, trade and other receivables, accounts
payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their
carrying values as a result of the short-term nature of the instruments, the variable interest rate associated with
the instruments or the fixed interest rate of the instruments being similar to market rates.
During 2021 and 2020, there were no transfers between levels 1, 2 and 3 and there were no changes in valuation
techniques.
100
The following table illustrates the classification of the Company’s financial assets and liabilities within the fair value
hierarchy as at December 31, 2021 and December 31, 2020:
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
Financial Assets:
Cash and equivalents
Trade and other receivables
Investments
Equity instruments-shares
Equity instruments-warrants
Restricted cash and equivalents
Elliot Lake reclamation trust fund
Credit facility pledged assets
Reclamation letter of credit collateral
Financial Liabilities:
Account payable and accrued liabilities
Debt obligations
Warrants on investment
Share purchase warrants
Financial
Instrument
Category(1)
Fair
Value
Hierarchy
December 31, December 31,
2021
Fair Value
2020
Fair Value
Category B
Category B
Category A
Category A
Category B
Category B
Category B
Category C
Category C
Category A
Category A
$
63,998 $
3,656
14,349
229
2,866
9,000
135
94,233 $
8,590
508
1,625
20,337
31,060 $
Level 1
Level 2
$
$
Level 2
Level 2
24,992
3,374
16,657
293
2,883
9,000
135
57,334
7,178
615
-
-
7,793
(1)
Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category
B=Financial assets at amortized cost; and Category C=Financial liabilities at amortized cost.
Investments in uranium are categorized in Level 2. Investments in uranium are measured at fair value at each
reporting period based on the month-end spot price for uranium published by UxC and converted to Canadian
dollars during the period-end indicative foreign exchange rate.
25. 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.
Specific Legal Matters
Mongolia Mining Division Sale – Arbitration Proceedings with Uranium Industry a.s
In November 2015, the Company sold all of its mining assets and operations located in Mongolia to Uranium
Industry a.s (“UI”) pursuant to an amended and restated share purchase agreement (the “GSJV Agreement”). The
primary assets at that time were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects.
As consideration for the sale per the GSJV Agreement, the Company received cash consideration of
USD$1,250,000 prior to closing and the rights to receive additional contingent consideration of up to
USD$12,000,000.
On September 20, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) formally issued mining license
certificates for all four projects, triggering Denison’s right to receive contingent consideration of USD$10,000,000
(collectively, the “Mining License Receivable”). The original due date for payment of the Mining License Receivable
by UI was November 16, 2016.
Under an extension agreement between UI and the Company, the payment due date of the Mining License
Receivable was extended from November 16, 2016 to July 16, 2017 (the “Extension Agreement”). As consideration
for the extension, UI agreed to pay interest on the Mining License Receivable amount at a rate of 5% per year,
payable monthly up to July 16, 2017 and they also agreed to pay a USD$100,000 instalment amount towards the
101
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
balance of the Mining License Receivable amount. The required payments were not made.
On February 24, 2017, the Company served notice to UI that it was in default of its obligations under the GSJV
Agreement and the Extension Agreement and on December 12, 2017, the Company filed a Request for Arbitration
between the Company and UI under the Arbitration Rules of the London Court of International Arbitration. The final
award was rendered by an arbitration panel on July 27, 2020, with the panel finding in favour of Denison and
ordering UI to pay the Company USD$10,000,000 plus interest at a rate of 5% per annum from November 16,
2016, plus certain legal and arbitration costs.
On January 13, 2022, the Company and UI executed a Repayment Schedule Agreement. See note 27 for details.
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, 2021, the Company had
outstanding letters of credit of $24,135,000 for reclamation obligations of which $24,000,000 is collateralized by
the Company’s 2021 credit facility (see note 16) and the remainder is collateralized by cash (see note 9).
Purchase of Office Building in Saskatoon
During the year ended December 31, 2021, the Company entered into an agreement to purchase an office building
in Saskatoon, Saskatchewan to accommodate the Company’s growing workforce. A deposit of $200,000 was made
prior to year-end, with the balance of the purchase amount, $2,800,000 due upon the closing of the transaction in
January 2022.
26. INTEREST IN OTHER ENTITIES
The significant subsidiaries, associates and joint arrangements of the Company at December 31, 2021 are listed
below. The table also includes information related to key contractual arrangements associated with the Company’s
mineral property interests that comprise 90.5% of the December 31, 2021 carrying value of its Mineral Property
assets (see note 10).
102
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Place
Of
Business
Canada
Canada
Canada
Canada
Bermuda
December December
31, 2020
31, 2021
Ownership Ownership Participating
Interest (2)
Interest (1)
Interest (1)
Fiscal
2021
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
N/A
N/A
N/A
N/A
N/A
Accounting
Method
Consolidation
Consolidation
Consolidation
Consolidation
Consolidation
Canada
Canada
60.00%
66.90%
60.00%
66.90%
100%
100%
Voting Share (4)
Voting Share (4)
Canada
50.00%
nil%
50.00%(5)
Equity(6)
Canada
Canada
Canada
Canada
Canada
90.00%
25.17%
30.00%
21.32%
22.50%
90.00%
25.17%
30.00%
21.89%
22.50%
90.00%(6)
25.17%
N/A (7)
nil%
22.50%
Denison Share (4)
Denison Share (4)
Denison Share (4)
Denison Share (4)
Denison Share (4)
Subsidiaries
Denison Mines Inc.
Denison AB Holdings Corp.
Denison Waterbury Corp
9373721 Canada Inc.
Denison Mines (Bermuda) I Ltd
Joint Operations
Waterbury Lake Uranium Corp(3)
Waterbury Lake Uranium LP(3)
Joint Venture
JCU
Key Contractual Arrangements
Wheeler River Joint Venture
Midwest Joint Venture
Mann Lake Joint Venture
Wolly Joint Venture
McClean Lake Joint Venture
(1) Ownership Interest represents Denison’s percentage equity / voting interest in the entity or contractual arrangement;
(2) Participating interest represents Denison’s percentage funding contribution to the particular joint operation or contractual arrangement. This
percentage can differ from ownership interest in instances where other parties to the arrangement have carried interests, they are earning-in
to the arrangement, or they are diluting their interest in the arrangement (provided the arrangement has dilution provisions therein);
(3) WLUC and WLULP were acquired by Denison as part of the Fission Energy Corp. Acquisition in April 2013. 2013. Denison uses its equity
interest to account for its share of assets, liabilities, revenues and expenses for these joint operations. In 2021, 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 23).
(4) Denison Share is where Denison accounts for its share of assets, liabilities, revenues and expenses in accordance with the specific terms
within the contractual arrangement. This can be by using either its ownership interest (i.e. Voting Share) or its participating interest (i.e.
Funding Share), depending on the arrangement terms. The Voting Share and Funding Share approaches produce the same accounting result
when the Company’s ownership interest and participating interests are equal;
(5) Denison acquired its 50% interest in JCU on August 3, 2021 (see note 8).
(6) Denison indirectly owns an additional 5% ownership interest through its joint venture in JCU, which is accounted for using the equity method
and is thus not reflected here as part of its participating share in the WRJV.
(7) The participating interest for 2021 for these arrangements is shown as Not Applicable as there were no approved spending programs carried
out during fiscal 2021.
27. SUBSEQUENT EVENTS
Tailings Management Facility Expansion and Updated Reclamation Plan Approved for MLJV and MWJV
Operations
In January 2022, the Canadian Nuclear Safety Commission approved an amendment to the operating license for
the MLJV and MWJV Operations, which allows for the expansion of the McClean Lake Tailings Management
Facility (“TMF”), along with the associated revised Preliminary Decommissioning Plan and cost estimate. As a
result of this updated plan, the Company’s pro-rata share of the financial assurances, required to be provided to
the Province of Saskatchewan, has decreased from $24,135,000 to $22,972,000. This will result in a decrease in
the pledged amount required under the 2022 Facility to $7,972,000, and the full release of the Company’s
additional cash collateral of $135,000. The Company’s reclamation obligation related to the MLJV is also expected
to decrease.
Mongolia Mining Division Sale – Repayment Schedule Agreement with Uranium Industry a.s
In January 2022, the Company executed a Repayment Schedule Agreement (the “Repayment Agreement”)
pursuant to which the parties negotiated the repayment of the debt owing from UI to Denison. In accordance with
the terms of the Repayment Agreement, the Company received an initial USD$2 million debt repayment instalment
in January 2022.
Under the terms of the Repayment Agreement, UI has agreed to make scheduled payments on account of the
103
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
Arbitration Award, plus additional interest and fees, through a series of quarterly installments and annual milestone
payments, until December 31, 2025. The total amount due to Denison under the Repayment Agreement, including
the initial USD$2 million already received, is approximately USD$16 million. The Repayment Agreement includes
customary covenants and conditions in favour of Denison, including certain restrictions on UI’s ability to take on
additional debt, in consideration for Denison’s deferral of enforcement of the Arbitration Award while UI is in
compliance with its obligations under the Repayment Agreement.
Bank of Nova Scotia Credit Facility Renewal
On January 21, 2022, the Company entered into an amending agreement with BNS to extend the maturity date of
the 2021 Facility (see note 16). Under the facility amendment, the maturity date has been extended to January 31,
2023 (the “2022 Facility”). All other terms of the 2022 Facility (tangible net worth covenants, pledged cash,
investment amounts and security for the facility) remain unchanged from those of the 2021 Facility, and the
Company continues to have access to credit up to $24,000,000 the use of which is restricted to non-financial letters
of credit in support of reclamation obligations.
The 2022 Facility remains subject to letter of credit and standby fees of 2.40% (0.40% on the $9,000,000 covered
by pledged cash collateral) and 0.75% respectively.
Changes to Composition of the Board of Directors
In January 2022, Ms. Laurie Sterritt was appointed to Denison’s Board of Directors. Ms. Sterritt, Partner at Leaders
International, has over 25 years of experience in the fields of Indigenous, government, and community relations.
In February 2022, Mr. Yun Chang Jeong joined the Company's Board of Directors. Mr. Jeong, General Manager
of the Nuclear Fuel Supply Section of KHNP, was nominated by KHNP pursuant to the KHNP Strategic
Relationship Agreement (‘KHNP SRA'), to fill the vacancy on the Board created by the February 2022 resignation
of Mr. Jun Gon Kim.
104
STOCK EXCHANGE LISTINGS
The Toronto Stock Exchange (TSX)
Trading Symbol: DML
NYSE American
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
KPMG LLP
Bay Adelaide Centre
333 Bay Street, Suite 4600
Toronto, Ontario M5H 2S5
Telephone: 416-777-8500
ADDITIONAL INFORMATION
Further information about Denison
is available by contacting Investor
Relations at Denison’s Head Office or
by email to: info@denisonmines.com
Corporate Information
BOARD OF DIRECTORS
Ron F. Hochstein
Chair of the Board
British Columbia, Canada
David D. Cates
Ontario, Canada
W. Robert Dengler
Ontario, Canada
Brian D. Edgar
British Columbia, Canada
Yun Chang Jeong
Gyeongsangbuk-do, Korea
David M. Neuburger
Saskatchewan, Canada
Laurie M. Sterritt
British Columbia, Canada
Jennifer J. Traub
British Columbia, Canada
Patricia M. Volker
Ontario, Canada
OFFICERS
David D. Cates
President and
Chief Executive Officer
Mac McDonald
Executive Vice President and
Chief Financial Officer
David Bronkhorst
Vice President, Operations
Kevin Himbeault
Vice President, Plant Operations
and Regulatory Affairs
Elizabeth Sidle
Vice President, Finance
Amanda Willett
Vice President, Legal and
Corporate Secretary
Head Office
Denison Mines Corp.
#1100 - 40 University Avenue
Toronto ON M5J 1T1 Canada
Tel: 416.979.1991
Fax: 416.979.5893
Email: info@denisonmines.com
Other Offices
Denison Mines Corp.
345 4th Avenue South
Saskatoon SK S7K 1N3 Canada
Tel: 306-652-8200
Fax: 306-652-8202
Denison Mines Inc.
1 Horne Walk, Suite 200
Elliot Lake ON P5A 2A5 Canada
Phone: 705-848-9191
Fax: 705-848-5814
Denisonmines.com
@DenisonMinesCo
TSX: DML | NYSE American: DNN
Cover Photo:
Commercial scale well development
activities on the 5-spot test pattern at
the Phoenix Deposit, Wheeler River,
Saskatchewan