UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE
13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Date: August 10, 2023
Commission File Number: 001-33414
Denison Mines Corp.
(Name of
registrant)
1100-40 University Avenue
Toronto Ontario
M5J 1T1 Canada
(Address of
principal executive offices)
Indicate by check mark whether the registrant files
or will file annual reports under cover Form 20-F or Form
40-F.
Form
20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(1): ☐
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(7): ☐
INCORPORATION BY
REFERENCE
Exhibits 99.1 and
99.2 to this Form 6-K of Denison Mines Corp. are hereby
incorporated by reference to its Registration Statement on Form
F-10 (File No. 333-258939), as amended or
supplemented.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
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DENISON MINES
CORP.
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/s/ Amanda Willett
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Date: August
10, 2023
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Amanda
Willett
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Vice
President Legal and Corporate Secretary
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FORM 6-K
EXHIBIT INDEX
Exhibit Number
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Description
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99.1
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99.2
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99.3
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99.4
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99.5
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(Unaudited -
Expressed in thousands of Canadian dollars (“CAD”)
except for share amounts)
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At June
30
2023
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At December
31
2022
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ASSETS
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Current
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Cash and cash
equivalents (note 4)
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$
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46,500
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$
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50,915
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Trade and other
receivables (note 5)
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5,659
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4,143
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Inventories (note
6)
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3,046
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2,713
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Investments-equity
instruments (note 7)
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8,483
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8,022
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Prepaid expenses
and other
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1,078
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1,367
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64,766
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67,160
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Non-Current
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Inventories-ore
in stockpiles (note 6)
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2,098
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2,098
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Investments-equity
instruments (note 7)
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157
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87
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Investments-uranium
(note 7)
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185,357
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162,536
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Investments-joint
venture (note 8)
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17,050
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19,305
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Restricted cash
and investments (note 9)
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11,579
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11,105
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Property, plant
and equipment (note 10)
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251,618
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253,505
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Total
assets
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$
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532,625
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$
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515,796
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LIABILITIES
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Current
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Accounts payable
and accrued liabilities (note 11)
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$
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10,461
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$
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10,299
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Current portion
of long-term liabilities:
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Deferred revenue
(note 12)
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4,536
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4,915
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Post-employment
benefits (note 13)
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120
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120
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Reclamation
obligations (note 14)
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2,144
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2,865
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Other liabilities
(note 16)
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223
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216
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17,484
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18,415
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Non-Current
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Deferred revenue
(note 12)
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30,774
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28,380
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Post-employment
benefits (note 13)
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1,034
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1,081
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Reclamation
obligations (note 14)
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27,043
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26,594
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Other liabilities
(note 16)
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291
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360
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Deferred income
tax liability
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4,272
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4,950
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Total
liabilities
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80,898
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79,780
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EQUITY
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Share capital
(note 17)
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1,555,553
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1,539,209
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Contributed
surplus (note 18)
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71,858
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70,281
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Deficit
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(1,177,595)
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(1,175,256)
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Accumulated other
comprehensive income (note 19)
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1,911
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1,782
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Total
equity
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451,727
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436,016
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Total
liabilities and equity
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$
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532,625
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$
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515,796
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Issued and
outstanding common shares (note 17)
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835,787,520
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826,325,592
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Commitments
and contingencies (note 24)
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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CONDENSED INTERIM
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
(Unaudited -
Expressed in thousands of CAD dollars except for share and per
share amounts)
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Three
Months Ended
June
30
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Six
Months Ended
June
30
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2023
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2022
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2023
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2022
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REVENUES (note 21)
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$
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3,491
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$
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6,800
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$
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4,575
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$
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10,925
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EXPENSES
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Operating
expenses (note 20 and 21)
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(3,007)
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(3,654)
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(5,567)
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(6,052)
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Exploration (note
21)
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(1,834)
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(1,060)
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(5,781)
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(3,626)
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Evaluation (note
21)
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(4,662)
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(6,616)
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(7,384)
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(11,081)
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General and
administrative (note 21)
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(3,209)
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(2,759)
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(6,463)
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(6,823)
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Other income
(expense) (note 20)
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12,000
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(7,481)
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22,246
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45,164
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(712)
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(21,570)
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(2,949)
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17,582
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Income
(loss) before net finance expense, equity accounting
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2,779
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(14,770)
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1,626
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28,507
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Finance expense,
net (note 20)
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(438)
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(876)
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(1,288)
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(1,574)
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Equity share of
loss of joint venture (note 8)
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(2,461)
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(812)
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(3,355)
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(1,304)
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Income (loss)
before taxes
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(120)
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(16,458)
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(3,017)
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25,629
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Income tax
recovery:
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Deferred
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181
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311
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678
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847
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Net income (loss)
for the period
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$
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61
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$
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(16,147)
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$
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(2,339)
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$
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26,476
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Other
comprehensive income (loss) (note 19):
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Items that are or
may be subsequently reclassified to income (loss):
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Foreign currency
translation change
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125
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(6)
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129
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(3)
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Comprehensive
income (loss) for the period
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$
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186
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$
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(16,153)
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$
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(2,210)
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$
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26,473
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Basic and diluted
net income (loss) per share:
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Basic
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$
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0.00
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$
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(0.02)
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$
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(0.00)
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$
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0.03
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Diluted
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$
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0.00
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$
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(0.02)
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$
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(0.00)
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$
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0.03
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Weighted-average
number of shares outstanding
(in
thousands):
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Basic
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835,660
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817,935
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834,243
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816,361
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Diluted
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845,425
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817,935
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844,124
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826,425
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
(Unaudited -
Expressed in thousands of CAD dollars)
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Six
Months Ended
June
30
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2023
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2022
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Share capital (note 17)
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Balance-beginning
of period
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$
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1,539,209
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$
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1,517,029
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Shares issued for
cash, net of issue costs
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15,339
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8,292
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Other shares
issued, net of issue costs
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193
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148
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Share options
exercised-cash
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452
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807
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Share options
exercised-transfer from contributed surplus
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178
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307
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Share units
exercised-transfer from contributed surplus
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182
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326
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Balance-end of
period
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1,555,553
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1,526,909
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Contributed surplus
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Balance-beginning
of period
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70,281
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67,496
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Share-based
compensation expense (note 18)
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1,937
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1,952
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Share options
exercised-transfer to share capital
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(178)
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(307)
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Share units
exercised-transfer to share capital
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(182)
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(326)
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Balance-end of
period
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71,858
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68,815
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Deficit
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Balance-beginning
of period
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(1,175,256)
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(1,189,610)
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Net income
(loss)
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(2,339)
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26,476
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Balance-end of
period
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(1,177,595)
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(1,163,134)
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Accumulated
other comprehensive income (note 19)
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Balance-beginning
of period
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1,782
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1,776
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Foreign currency
translation
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129
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(3)
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Balance-end of
period
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1,911
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1,773
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Total Equity
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Balance-beginning
of period
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$
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436,016
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$
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396,691
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Balance-end of
period
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$
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451,727
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$
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434,363
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The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
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CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited -
Expressed in thousands of CAD dollars)
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Six
Months Ended
June
30
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2023
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2022
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CASH PROVIDED BY (USED IN):
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OPERATING ACTIVITIES
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Net income (loss)
for the period
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$
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(2,339)
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$
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26,476
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Adjustments and
items not affecting cash and cash equivalents:
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Depletion,
depreciation, amortization and accretion
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4,891
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4,052
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Fair value change
losses (gains):
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Investments-equity
instruments (notes 7 and 20)
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1,885
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4,986
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Investments-uranium
(notes 7 and 20)
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(22,821)
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(29,579)
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Warrants
on investment (notes 7 and 20)
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-
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(1,170)
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Share
purchase warrants liabilities (note 20)
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-
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(16,733)
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Joint
venture-equity share of loss (note 8)
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3,355
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1,304
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Reversal
(recognition) of deferred revenue (note 12)
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14
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(3,976)
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Loss (gain) on
property, plant and equipment disposals
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(1,299)
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36
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Post-employment
benefit payments (note 13)
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(57)
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(66)
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Reclamation
obligation expenditures (note 14)
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(1,211)
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(854)
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Reclamation
liability deposit from joint venture partner (note 14)
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99
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-
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Share-based
compensation (note 18)
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1,937
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1,952
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Foreign exchange
loss (gain) (note 20)
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|
191
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(287)
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Deferred income
tax recovery
|
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(678)
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(847)
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Change in
non-cash operating working capital items (note 20)
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(1,179)
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|
1,377
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Net
cash used in operating activities
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(17,212)
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(13,329)
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INVESTING ACTIVITIES
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(Decrease)/Increase
in restricted cash and investments (note 9)
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(474)
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438
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Purchase of
investment in joint venture (note 8)
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|
(1,100)
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-
|
Additions of
property, plant and equipment (note 10)
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|
(1,351)
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|
(3,644)
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Proceeds on
disposal of property, plant and equipment
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|
125
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|
-
|
Net
cash used in investing activities
|
|
|
|
(2,800)
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|
(3,206)
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|
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FINANCING ACTIVITIES
|
|
|
|
|
|
|
Issuance of debt
obligations (note 16)
|
|
|
|
-
|
|
72
|
Repayment
of debt obligations (note 16)
|
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|
|
(110)
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|
(106)
|
Proceeds
from share issues, net of issue costs (note 17)
|
|
|
|
15,319
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|
8,292
|
Proceeds
from share options exercised (note 17)
|
|
|
|
452
|
|
807
|
Net
cash provided by financing activities
|
|
|
|
15,661
|
|
9,065
|
|
|
|
|
|
|
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Decrease
in cash and cash equivalents
|
|
|
|
(4,351)
|
|
(7,470)
|
Foreign
exchange effect on cash and cash equivalents
|
|
|
|
(64)
|
|
311
|
Cash
and cash equivalents, beginning of period
|
|
|
|
50,915
|
|
63,998
|
Cash
and cash equivalents, end of period
|
|
|
$
|
46,500
|
$
|
56,839
|
|
|
The accompanying
notes are an integral part of the condensed interim consolidated
financial statements
|
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2023
|
(Unaudited -
Expressed in CAD dollars except for shares and per share
amounts)
|
|
Denison Mines
Corp. (“DMC”) and its subsidiary companies and joint
arrangements (collectively, “Denison” or the
“Company”) are engaged in uranium mining related
activities, which can include acquisition, exploration, and
development of uranium bearing properties, 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 67.41% 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 Saskatchewan, 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
33.8118%) and the Christie Lake project (JCU 34.4508%). See note 8
for details.
Denison is also
engaged in post-closure mine care and maintenance services through
its Closed Mines group, which manages Denison’s Elliot Lake
reclamation projects and provides related services to certain
third-party projects.
DMC is
incorporated under the Business Corporations Act (Ontario) and
domiciled in Canada. The address of its registered head office is
40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J
1T1.
2.
STATEMENT
OF COMPLIANCE
These condensed
interim consolidated financial statements have been prepared in
accordance with International Accounting Standards
(“IAS”) 34, Interim Financial Reporting. The condensed
interim consolidated financial statements should be read in
conjunction with the audited annual consolidated financial
statements for the year ended December 31, 2022. The
Company’s presentation currency is Canadian dollars
(“CAD”).
These financial
statements were approved by the board of directors for issue on
August 9, 2023.
The significant
accounting policies followed in these condensed interim
consolidated financial statements are consistent with those applied
in the Company’s audited annual consolidated financial
statements for the year ended December 31, 2022.
The Company has
considered the amendments to IAS 1: Presentation of Financial
Statements, IAS 8: Accounting Policies, Changes in Account
Estimates and Errors, IAS 12: Income Taxes and IFRS 17: Reporting
Standard for Insurance Contracts, which are effective for annual
periods beginning on or after January 1, 2023 and has concluded
that these amendments have no impact on the Company’s
condensed interim consolidated financial statements.
4.
CASH AND
CASH EQUIVALENTS
The cash and cash
equivalent balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
1,537
|
$
|
1,801
|
Cash in MLJV and
MWJV
|
|
|
|
1,389
|
|
1,263
|
Cash
equivalents
|
|
|
|
43,574
|
|
47,851
|
|
|
|
$
|
46,500
|
$
|
50,915
|
5.
TRADE AND
OTHER RECEIVABLES
The trade and
other receivables balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
$
|
4,997
|
$
|
3,184
|
Receivables in
MLJV and MWJV
|
|
|
|
508
|
|
508
|
Sales tax
receivables
|
|
|
|
130
|
|
428
|
Sundry
receivables
|
|
|
|
24
|
|
23
|
|
|
|
$
|
5,659
|
$
|
4,143
|
The inventories
balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Inventory of ore
in stockpiles
|
|
|
$
|
2,098
|
$
|
2,098
|
Mine and mill
supplies in MLJV
|
|
|
|
3,046
|
|
2,713
|
|
|
|
$
|
5,144
|
$
|
4,811
|
|
|
|
|
|
|
|
Inventories-by
balance sheet presentation:
|
|
|
|
|
|
|
Current
|
|
|
$
|
3,046
|
$
|
2,713
|
Long term-ore in
stockpiles
|
|
|
|
2,098
|
|
2,098
|
|
|
|
$
|
5,144
|
$
|
4,811
|
The investments
balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
Equity
instruments
|
|
|
|
|
|
|
Shares
|
|
|
$
|
8,483
|
$
|
8,022
|
Warrants
|
|
|
|
157
|
|
87
|
Physical
Uranium
|
|
|
|
185,357
|
|
162,536
|
|
|
|
$
|
193,997
|
$
|
170,645
|
|
|
|
|
|
|
|
Investments-by
balance sheet presentation:
|
|
|
|
|
|
|
Current
|
|
|
$
|
8,483
|
$
|
8,022
|
Long-term
|
|
|
|
185,514
|
|
162,623
|
|
|
|
$
|
193,997
|
$
|
170,645
|
The investments
continuity summary is as follows:
(in
thousands)
|
|
Equity
Instruments
|
|
Physical
Uranium
|
|
Total
Investments
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
$
|
8,109
|
$
|
162,536
|
$
|
170,645
|
Acquired
investments (note 10)
|
|
2,416
|
|
-
|
|
2,416
|
Change in fair
value gain to profit (note 20)
|
|
(1,885)
|
|
22,821
|
|
20,936
|
|
Balance-June 30,
2023
|
$
|
8,640
|
|
185,357
|
|
193,997
|
|
At June 30, 2023,
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.
Investment
in uranium
At June 30, 2023,
the Company holds a total of 2,500,000 pounds of physical uranium
as uranium oxide concentrates (“U3O8“) at a cost
of $91,674,000 (US Dollars (“USD”) $74,140,000),
including purchase commissions. The uranium is being held as a
long-term investment.
8.
INVESTMENT
IN JOINT VENTURE
The investment in
joint venture balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Investment in
joint venture:
|
|
|
|
|
|
|
JCU
|
|
|
$
|
17,050
|
$
|
19,305
|
|
|
|
$
|
17,050
|
$
|
19,305
|
A summary of the
investment in JCU is as follows:
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
|
|
|
|
$
|
19,305
|
Investment at
cost:
|
|
|
|
|
|
|
Equity
share of loss
|
|
|
|
|
|
(3,355)
|
Additional
investment in JCU
|
|
|
|
|
|
1,100
|
Balance-June 30,
2023
|
|
|
|
|
$
|
17,050
|
JCU is a private
company that holds a portfolio of twelve uranium project joint
venture interests in Canada, including a 10% interest in the WRJV,
a 30.099% interest in the Millennium project (Cameco Corporation
69.901%), a 33.8118% interest in the Kiggavik project (Orano Canada
Inc. 66.1882%), and a 34.4508% interest in the Christie Lake
project (UEC 65.5492%).
During the six
months ended June 30, 2023, each shareholder of JCU funded
operations with an investment in JCU of $1,100,000. The investment
was made by share subscription, where each shareholder acquired
additional common shares in JCU in accordance with each
shareholder’s pro-rata ownership interest in JCU. As a
result, the Company’s ownership interest in JCU remained
unchanged at 50%.
The following
tables summarize the consolidated financial information of JCU on a
100% basis, taking into account adjustments made by Denison for
equity accounting purposes (including fair value adjustments and
differences in accounting policies). Denison records its equity
share of earnings (loss) in JCU one month in arrears (due to the
information not yet being available), adjusted for any known
material transactions that have occurred up to the period end date
on which Denison is reporting.
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Total current
assets(1)
|
|
|
$
|
2,283
|
$
|
2,273
|
Total non-current
assets
|
|
|
|
38,463
|
|
38,371
|
Total current
liabilities
|
|
|
|
(2,904)
|
|
(1,949)
|
Total non-current
liabilities
|
|
|
|
(3,743)
|
|
(86)
|
Total net
assets
|
|
|
$
|
34,099
|
$
|
38,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
May 31,
2023(2)
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
$
|
-
|
Net
loss
|
|
|
|
|
|
(6,710)
|
Other
comprehensive income
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
JCU net assets to Denison investment carrying value:
|
|
|
Adjusted net assets of
JCU–at December 31, 2022
|
|
|
$
|
38,609
|
Net
loss
|
|
|
|
|
|
(6,710)
|
Investment from
owners
|
|
|
|
|
|
2,200
|
Net assets of
JCU-at May 31, 2023
|
|
|
|
|
$
|
34,099
|
Denison ownership
interest
|
|
|
|
|
|
50.00%
|
Investment in
JCU
|
|
|
|
|
$
|
17,050
|
(1)
Included in current assets
are $1,183,000 in cash and cash equivalents (December 31, 2022 -
$1,473,000).
(2)
Represents JCU net loss for
the six months ended May 31, 2023 (recorded one month in arrears),
adjusted for differences in fair value allocations and accounting
policies.
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:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
3,607
|
$
|
3,133
|
Investments
|
|
|
|
7,972
|
|
7,972
|
|
|
|
$
|
11,579
|
$
|
11,105
|
|
|
|
|
|
|
|
Restricted cash
and investments-by item:
|
|
|
|
|
|
|
Elliot Lake
reclamation trust fund
|
|
|
$
|
3,607
|
$
|
3,133
|
Letters of credit
facility pledged assets
|
|
|
|
7,972
|
|
7,972
|
|
|
|
$
|
11,579
|
$
|
11,105
|
At June 30, 2023
investments consist of guaranteed investment certificates with
maturities of less than 90 days.
Elliot
Lake reclamation trust fund
During the six
months ended June 30, 2023 the Company deposited an additional
$864,000 into the Elliot Lake reclamation trust fund and withdrew
$452,000.
Letters of
credit facility pledged assets
At June 30, 2023,
the Company has $7,972,000 on deposit with Bank of Nova Scotia
(“BNS”) as pledged restricted cash and investments
pursuant to its obligations under the letters of credit facility
(see notes 14 and 16).
10.
PROPERTY,
PLANT AND EQUIPMENT
The property,
plant and equipment (“PP&E”) continuity summary is
as follows:
|
|
Plant
and Equipment
|
|
Mineral
|
|
Total
|
(in
thousands)
|
|
Owned
|
|
Right-of-Use
|
|
Properties
|
|
PP&E
|
|
|
|
|
|
|
|
|
|
Cost:
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
$
|
108,068
|
$
|
763
|
$
|
180,219
|
$
|
289,050
|
Additions (note
21)
|
|
971
|
|
34
|
|
380
|
|
1,385
|
Disposals
|
|
(157)
|
|
(28)
|
|
(1,242)
|
|
(1,427)
|
Balance-June 30,
2023
|
$
|
108,882
|
$
|
769
|
$
|
179,357
|
$
|
289,008
|
|
|
|
|
|
|
|
|
|
Accumulated
amortization, depreciation:
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
$
|
(35,150)
|
$
|
(395)
|
$
|
-
|
$
|
(35,545)
|
Amortization
|
|
(94)
|
|
-
|
|
-
|
|
(94)
|
Depreciation
(note 20)
|
|
(1,865)
|
|
(70)
|
|
-
|
|
(1,935)
|
Disposals
|
|
157
|
|
27
|
|
-
|
|
184
|
Balance-June 30,
2023
|
$
|
(36,952)
|
$
|
(438)
|
$
|
-
|
$
|
(37,390)
|
|
|
|
|
|
|
|
|
|
Carrying
value:
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
$
|
72,918
|
$
|
368
|
$
|
180,219
|
$
|
253,505
|
Balance-June 30,
2023
|
$
|
71,930
|
$
|
331
|
$
|
179,357
|
$
|
251,618
|
Plant and
Equipment – Owned
The Company has a
22.5% interest in the McClean Lake mill through its ownership
interest in the MLJV. The carrying value of the mill, comprised of
various infrastructure, building and machinery assets, represents
$54,584,000, or 75.5%, of the June 30, 2023 total carrying value
amount of owned Plant and Equipment assets.
The additions to
PP&E during the six months ended June 30, 2023 primarily relate
to interests in mineral properties acquired in the period and
renovations of an office building in Saskatoon, Saskatchewan to
accommodate the Company’s growing workforce.
Plant and
Equipment – Right-of-Use
The Company has
included the cost of various right-of-use (“ROU”)
assets within its plant and equipment ROU carrying value amount.
These assets consist of building, vehicle and office equipment
leases. The majority of the asset value is attributable to the
building lease assets for the Company’s office in Toronto and
warehousing space in Saskatoon.
Mineral
Properties
As at June 30,
2023, the Company has various interests in development, evaluation
and exploration projects located in Saskatchewan, Canada, which are
either held directly, or through contractual arrangements. The
properties with significant carrying values are Wheeler River,
Waterbury Lake, Midwest, Mann Lake, Wolly, Johnston Lake and
McClean Lake, which together represent $163,119,000, or 90.9%, of
the total mineral properties carrying value as at June 30,
2023.
During the six
months ended June 30, 2023, the Company entered into and completed
an agreement to sell its 100% interest in the South Dufferin
property to Skyharbour Resources Ltd (“Skyharbour”) in
exchange for $125,000 in cash, 6,000,000 common shares of
Skyharbour, and 1,000,000 warrants with an exercise price of $0.60
and a 24 months term, for total consideration of $2,541,000 and a
gain on sale of $1,299,000.
11. ACCOUNTS
PAYABLE AND ACCRUED LIABILITIES
The accounts
payable and accrued liabilities balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Trade
payables
|
|
|
$
|
4,888
|
$
|
5,434
|
Payables in MLJV
and MWJV
|
|
|
|
4,988
|
|
4,036
|
Other
payables
|
|
|
|
585
|
|
829
|
|
|
|
$
|
10,461
|
$
|
10,299
|
12. DEFERRED
REVENUE
The deferred
revenue balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Deferred
revenue-pre-sold toll milling:
|
|
|
|
|
|
|
CLJV Toll
Milling-Ecora
|
|
|
$
|
35,310
|
$
|
33,295
|
|
|
|
$
|
35,310
|
$
|
33,295
|
Deferred
revenue-by balance sheet presentation:
|
|
|
|
|
Current
|
|
|
$
|
4,536
|
$
|
4,915
|
Non-current
|
|
|
|
30,774
|
|
28,380
|
|
|
|
$
|
35,310
|
$
|
33,295
|
The deferred
revenue liability continuity summary is as follows:
(in
thousands)
|
|
|
|
|
|
|
Deferred
Revenue
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
|
|
|
|
$
|
33,295
|
Revenue reversed
during the period (note 21)
|
|
|
|
|
|
14
|
Accretion (note
20)
|
|
|
|
|
|
2,001
|
Balance-June 30,
2023
|
|
|
|
|
$
|
35,310
|
Arrangement
with Ecora Resources PLC (“Ecora”)
In February 2017,
Denison closed an arrangement with Ecora, formerly named Anglo
Pacitifc Group PLC (“APG”), under which Denison
received an upfront payment in exchange for its right to receive
specified future toll milling cash receipts from the MLJV under the
current toll milling agreement with the CLJV from July 1, 2016
onwards. The up-front payment was based upon an estimate of the
gross toll milling cash receipts to be received by
Denison.
The Ecora
Arrangement represents a contractual obligation of Denison to pay
onward to Ecora any cash proceeds of future toll milling revenue
earned by the Company related to the processing of the specified
Cigar Lake ore through the McClean Lake mill. The deferred revenue
balance represents a non-cash liability, which is adjusted as any
toll milling revenue received by Denison is passed through to
Ecora, or any changes in Cigar Lake Phase 1 and Phase 2 tolling
milling production estimates are recognized.
In the six months
ended June 30, 2023, the Company recognized negative toll milling
revenue of $14,000. Production-based revenue of $1,932,000 was
recognized based on toll milling production of 7,667,000 pounds
U3O8 (100% basis).
This production-based revenue was more than offset by a $1,946,000
true-up adjustment to decrease the revenue recognized in prior
periods as a result of changes in the estimates used to determine
the toll milling drawdown rate. The true-up adjustment was
predominantly driven by a change in the estimated timing of the
milling of the Cigar Lake ore, following an announcement from the
operators of the Cigar Lake mine that mine production would be
increased from previous planned amounts of 15 million pounds of
U3O8 per year to 18
million pounds of U3O8 per year in 2023
and 2024. Under IFRS 15, Revenue from Contracts with Customers, the
change in the estimated timing of the toll milling of the CLJV ore
resulted in a decrease to the implied financing component of the
toll milling transaction, decreasing the total deferred revenue to
be recognized over the life of the toll milling contract, as well
as the deferred revenue drawdown rate. The updated drawdown rate
has been applied retrospectively to all pounds produced for the
CLJV since the inception of the Ecora arrangement, resulting in the
current period negative true-up.
For the
comparative six months ended June 30, 2022, the Company recognized
$3,976,000 of toll milling revenue from the draw-down of deferred
revenue, based on Cigar Lake toll milling production in the
six-month period (9,105,000 pounds U3O8 100% basis). The
drawdown in 2022 included a cumulative increase in revenue for
prior periods of $1,444,000 resulting from changes in estimates to
the toll milling drawdown rate in the first quarter of
2022.
During the six
months ended June 30, 2023, the Company recognized accretion
expense of $2,001,000, including a true-up adjustment of $483,000
due to the change in the estimated timing of milling of the Cigar
Lake ore (June 30, 2022 $1,181,000 including a negative $297,000
true up adjustment).
The current
portion of the deferred revenue liability reflects Denison’s
estimate of Cigar Lake toll milling over the next 12 months. This
assumption is based on current mill packaged production
expectations and is reassessed on a quarterly basis.
13. POST-EMPLOYMENT
BENEFITS
The
post-employment benefits balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Accrued benefit
obligation
|
|
|
$
|
1,154
|
$
|
1,201
|
|
|
|
$
|
1,154
|
$
|
1,201
|
|
|
|
|
|
|
|
Post-employment
benefits-by balance sheet presentation:
|
|
|
|
|
Current
|
|
|
$
|
120
|
$
|
120
|
Non-current
|
|
|
|
1,034
|
|
1,081
|
|
|
|
$
|
1,154
|
$
|
1,201
|
The
post-employment benefits continuity summary is as
follows:
(in
thousands)
|
|
|
|
|
|
Post-Employment
Benefits
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
|
|
|
|
$
|
1,201
|
Accretion (note
20)
|
|
|
|
|
|
10
|
Benefits
paid
|
|
|
|
|
|
(57)
|
Balance-June 30,
2023
|
|
|
|
|
$
|
1,154
|
14. RECLAMATION
OBLIGATIONS
The reclamation
obligations balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Reclamation
obligations-by item:
|
|
|
|
|
|
|
Elliot
Lake
|
|
|
$
|
16,622
|
$
|
16,634
|
MLJV and
MWJV
|
|
|
|
10,353
|
|
10,069
|
Wheeler River and
other
|
|
|
|
2,212
|
|
2,756
|
|
|
|
$
|
29,187
|
$
|
29,459
|
|
|
|
|
|
|
|
Reclamation
obligations-by balance sheet presentation:
|
|
|
|
|
Current
|
|
|
$
|
2,144
|
$
|
2,865
|
Non-current
|
|
|
|
27,043
|
|
26,594
|
|
|
|
$
|
29,187
|
$
|
29,459
|
The reclamation
obligations continuity summary is as follows:
(in
thousands)
|
|
|
|
|
|
Reclamation
Obligations
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
|
|
|
|
$
|
29,459
|
Reclamation
liability deposit from joint venture partner
|
|
|
|
|
|
99
|
Accretion (note
20)
|
|
|
|
|
|
840
|
Expenditures
incurred
|
|
|
|
|
|
(1,211)
|
Balance-June 30,
2023
|
|
|
|
|
$
|
29,187
|
Site
Restoration: Elliot Lake
The Elliot Lake
uranium mine was closed in 1992 and capital works to decommission
this site were completed in 1997. The Company is responsible for
monitoring the Tailings Management Areas at the Denison and
Stanrock sites and for treatment of water discharged from these
areas.
Spending on
restoration activities at the Elliot Lake site is funded by the
Elliot Lake Reclamation Trust fund (see note 9).
Site
Restoration: McClean Lake Joint Venture and Midwest Joint
Venture
Under the
Saskatchewan Mineral Industry Environmental Protection Regulations
(1996), the Company is required to provide its pro-rata share of
financial assurances to the province of Saskatchewan relating to
future decommissioning and reclamation plans that have been filed
and approved by the applicable regulatory authorities. Accordingly
as at June 30, 2023, the Company has provided irrevocable standby
letters of credit, from a chartered bank, in favour of the
Saskatchewan Ministry of Environment, totalling $22,972,000, which
relate to the most recently filed reclamation plan dated November
2021.
Site
Restoration: Wheeler River and other
The
Company’s exploration and evaluation activities, including
those related to Wheeler River, are subject to environmental
regulations as set out by the government of Saskatchewan.
Accordingly as at June 30, 2023, the Company has provided
irrevocable standby letters of credit, from a chartered bank, in
favour of the Saskatchewan Ministry of Environment, totalling
$992,000, which relate to the most recently filed reclamation plan
dated December 2022. In the six months ended June 30, 2023, the
Company received a deposit of $99,000 from its joint venture
partner to cover its share of the required letters of
credit.
15. SHARE
PURCHASE WARRANTS
In connection
with the public offerings of units in February 2021 and March 2021,
the Company issued 15,796,975 and 39,215,000 share purchase
warrants to unit holders, respectively. The February 2021 warrants
entitled the holder to acquire one common share of the Company at
an exercise price of USD$2.00 for 24 months after issuance (expired
February 2023). The March 2021 warrants entitled the holder to
acquire one common share of the Company at an exercise price of
USD$2.25 for 24 months after issuance (expired March
2023).
Since these
warrants were exercisable in USD, which differs from the
Company’s CAD functional currency, they were classified as
derivative liabilities and were required to be carried as
liabilities at Fair Value Though Profit or Loss. When the fair
value of the warrants was revalued at each reporting period, the
change in the liability was recorded through net profit or loss in
“Other income (expense)”. At December 31, 2022, the
fair value of the share purchase warrants were estimated to be
$nil.
February
2021 Warrants
In February 2023,
the outstanding share purchase warrants issued to unit holders
expired.
March 2021
Warrants
In March 2023,
the outstanding share purchase warrants issued to unit holders
expired.
|
Number
of
|
|
Warrant
|
(in thousands
except warrant amounts)
|
Warrants
|
|
Liability
|
|
|
|
|
Balance-December
31, 2022
|
55,006,475
|
$
|
-
|
Expiry of share
purchase warrants
|
(55,006,475)
|
|
-
|
Balance-June 30,
2023
|
-
|
$
|
-
|
16. OTHER
LIABILITIES
The other
liabilities balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Other
liabilities:
|
|
|
|
|
|
|
Lease
obligations
|
|
|
$
|
359
|
$
|
396
|
Loan
obligations
|
|
|
|
155
|
|
180
|
|
|
|
$
|
514
|
$
|
576
|
|
|
|
|
|
|
|
Other
liabilities-by balance sheet presentation:
|
|
|
|
|
|
|
Current
|
|
|
$
|
223
|
$
|
216
|
Non-current
|
|
|
|
291
|
|
360
|
|
|
|
$
|
514
|
$
|
576
|
Debt
Obligations
At June 30, 2023,
the Company’s debt obligations are comprised of lease and
loan liabilities. The debt obligations continuity summary is as
follows:
|
|
|
Lease
|
|
Loan
|
|
Total
Debt
|
(in
thousands)
|
|
|
|
Liabilities
|
|
Liabilities
|
|
Obligations
|
|
|
|
|
|
|
|
|
|
Balance-December
31, 2022
|
|
|
$
|
396
|
$
|
180
|
$
|
576
|
Accretion (note
20)
|
|
|
|
15
|
|
-
|
|
15
|
Additions (note
10)
|
|
|
|
34
|
|
-
|
|
34
|
Repayments
|
|
|
|
(85)
|
|
(25)
|
|
(110)
|
Liability
adjustment gain
|
|
|
|
(1)
|
|
-
|
|
(1)
|
Balance-June 30,
2023
|
|
|
$
|
359
|
$
|
155
|
$
|
514
|
Debt
Obligations – Scheduled Maturities
The following
table outlines the Company’s scheduled maturities of its debt
obligations at June 30, 2023:
|
|
|
Lease
|
|
Loan
|
|
Total
Debt
|
(in
thousands)
|
|
|
|
Liabilities
|
|
Liabilities
|
|
Obligations
|
|
|
|
|
|
|
|
|
|
Maturity
analysis-contractual undiscounted cash flows:
|
|
|
|
|
|
|
Next 12
months
|
|
|
$
|
168
|
$
|
55
|
$
|
223
|
One to five
years
|
|
|
|
227
|
|
108
|
|
335
|
More than five
years
|
|
|
|
-
|
|
-
|
|
-
|
Total
obligation-end of period-undiscounted
|
|
|
|
395
|
|
163
|
|
558
|
Present value
discount adjustment
|
|
|
|
(36)
|
|
(8)
|
|
(44)
|
Total
obligation-end of period-discounted
|
|
|
$
|
359
|
$
|
155
|
$
|
514
|
Letters of
Credit Facility
In December 2022,
the Company entered into an agreement with BNS to amend the terms
of the 2022 Credit Facility to extend the maturity date to January
31, 2024 (“2023 Credit Facility”) and to increase the
credit available under the facility by $992,000 to cover additional
standby letters of credit with respect to environmental obligations
associated with the Feasibility Field Test activities at Wheeler
River. All other terms of the 2023 Credit Facility (tangible net
worth covenant, investment amounts, pledged assets and security for
the facility) remain unchanged by the amendment and the 2023
Facility remains subject to letter of credit and standby fees of
2.40% (0.40% on the $7,972,000 covered by pledged cash collateral)
and 0.75% respectively. During the six months ended June 30, 2023,
the Company incurred letter of credit fees of $209,000 (June 30,
2022 - $192,000).
At June 30, 2023,
the Company is in compliance with its facility covenants and has
access to letters of credit of up to $23,964,000 (December 31, 2022
- $23,964,000). The facility is fully utilized as collateral for
non-financial letters of credit issued in support of reclamation
obligations for the MLJV, MWJV and Wheeler River (see note
14).
17. SHARE
CAPITAL
Denison is
authorized to issue an unlimited number of common shares without
par value. A continuity summary of the issued and outstanding
common shares and the associated dollar amounts is presented
below:
|
Number
of
|
|
|
|
Common
|
|
Share
|
(in thousands
except share amounts)
|
Shares
|
|
Capital
|
|
|
|
|
Balance-December
31, 2022
|
826,325,592
|
$
|
1,539,209
|
Issued for
cash:
|
|
|
|
Shares issued
proceeds-total
|
8,481,060
|
|
15,653
|
Less: share issue
costs
|
-
|
|
(314)
|
Other share issue
proceeds-total
|
153,237
|
|
213
|
Less: other share
issue costs
|
-
|
|
(20)
|
Share option
exercises
|
666,714
|
|
452
|
Share option
exercises-transfer from contributed surplus
|
-
|
|
178
|
Share unit
exercises-transfer from contributed surplus
|
160,917
|
|
182
|
|
9,461,928
|
|
16,344
|
Balance-June 30,
2023
|
835,787,520
|
$
|
1,555,553
|
Unit and
Other Share Issues
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
and 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 At-the-Market (“ATM”) equity offering
program qualified by a prospectus supplement to the 2021 Shelf
Prospectus (“2021 ATM Program"). The 2021 ATM Program allows
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.
During the
six-months ended June 30, 2023, the Company issued 8,481,060 shares
under the 2021 ATM Program. The common shares were issued at an
average price of $1.85 per share for aggregate gross proceeds of
$15,653,000. The Company also recognized issue costs of $314,000
related to these ATM share issuances, which include $313,000 of
commissions and $1,000 associated with the maintenance of the 2021
Shelf Prospectus and 2021 ATM Program.
In total, as at
June 30, 2023, the Company has issued 23,364,222 shares under the
2021 ATM Program for aggregate gross proceeds of $43,828,000. The
common shares were issued at an average price of $1.88. The Company
also recognized total issue costs of $1,661,000 related to its ATM
share issuances which includes $877,000 of commissions and $784,000
associated with the set-up and maintenance of the 2021 Shelf
Prospectus and 2021 ATM Program.
18. SHARE-BASED
COMPENSATION
The
Company’s share-based compensation arrangements include share
options, restricted share units (“RSUs”) and
performance share units (“PSUs”).
Share-based
compensation is recorded over the vesting period, and a summary of
share-based compensation expense recognized in the statement of
income (loss) is as follows:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Share based
compensation expense for:
|
|
|
|
|
|
|
|
|
Share
options
|
$
|
(322)
|
$
|
(370)
|
$
|
(697)
|
$
|
(759)
|
RSUs
|
|
(547)
|
|
(561)
|
|
(1,154)
|
|
(1,060)
|
PSUs
|
|
(24)
|
|
(91)
|
|
(86)
|
|
(133)
|
Share
based compensation expense
|
$
|
(893)
|
$
|
(1,022)
|
$
|
(1,937)
|
$
|
(1,952)
|
An additional
$3,716,000 in share-based compensation expense remains to be
recognized, up until May 2026, on outstanding share options and
share units at June 30, 2023.
Share
Options
Share options
granted in 2023 vest over a period of three years. A continuity
summary of the share options granted under the Company’s
Share Option Plan is presented below:
|
|
|
|
2023
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
Exercise
|
|
|
|
|
|
|
Number
of
Common
|
|
Price
per
Share
|
|
|
|
|
|
|
Shares
|
|
(CAD)
|
|
|
|
|
|
|
|
|
|
Share options
outstanding-December 31, 2022
|
|
|
|
|
|
8,539,214
|
$
|
1.09
|
Grants
|
|
|
|
|
|
1,766,000
|
|
1.49
|
Exercises
(1)
|
|
|
|
|
|
(666,714)
|
|
0.68
|
Expiries
|
|
|
|
|
|
(24,000)
|
|
0.60
|
Forfeitures
|
|
|
|
|
|
(299,000)
|
|
1.35
|
Share options
outstanding-June 30, 2023
|
|
|
|
|
|
9,315,500
|
$
|
1.18
|
Share
options exercisable-June 30, 2023
|
|
|
|
|
|
6,450,336
|
$
|
0.99
|
(1)
The weighted average share
price at the date of exercise was CAD$1.70.
A summary of the
Company’s share options outstanding at June 30, 2023 is
presented below:
|
|
|
|
|
Weighted
|
|
|
|
Weighted-
|
|
|
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
|
Remaining
|
|
|
|
Exercise
|
Range of
Exercise
|
|
|
|
|
Contractual
|
|
Number
of
|
|
Price
per
|
Prices per
Share
|
|
|
|
|
Life
|
|
Common
|
|
Share
|
(CAD)
|
|
|
|
|
(Years)
|
|
Shares
|
|
(CAD)
|
|
|
|
|
|
|
|
|
|
|
Share options
outstanding
|
|
|
|
|
|
|
$ 0.25 to $
0.49
|
|
1.69
|
|
1,667,500
|
$
|
0.46
|
$ 0.50 to $
0.74
|
|
|
|
|
0.75
|
|
1,299,500
|
|
0.68
|
$ 0.75 to $
0.99
|
|
|
|
|
-
|
|
-
|
|
-
|
$ 1.00 to $
1.49
|
|
|
|
|
3.44
|
|
4,712,500
|
|
1.36
|
$ 1.50 to $
1.99
|
|
|
|
|
3.72
|
|
1,555,000
|
|
1.81
|
$ 2.00 to $
2.49
|
|
|
|
|
3.43
|
|
81,000
|
|
2.21
|
Share options
outstanding-June 30, 2023
|
|
2.80
|
|
9,315,500
|
$
|
1.18
|
Share options
outstanding at June 30, 2023 expire between March 2024 and May
2028.
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:
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
2023
|
|
|
|
|
|
Risk-free
interest rate
|
|
|
|
3.68% to
3.95%
|
Expected stock
price volatility
|
|
|
|
72.86 % to
73.41%
|
Expected
life
|
|
|
|
3.42 to
3.43
|
Expected dividend
yield
|
|
|
|
-
|
Fair value
per options granted
|
|
|
0.79 to
0.80
|
Share
Units
RSUs granted
under the Share Unit Plan in 2023 vest ratably over a period of
three years.
|
|
RSUs
|
|
PSUs
|
|
|
|
|
Weighted
|
|
|
|
Weighted
|
|
|
|
|
Average
|
|
|
|
Average
|
|
|
Number
of
|
|
Fair
Value
|
|
Number
of
|
|
Fair
Value
|
|
|
Common
|
|
Per
RSU
|
|
Common
|
|
Per
PSU
|
|
|
Shares
|
|
(CAD)
|
|
Shares
|
|
(CAD)
|
|
|
|
|
|
|
|
|
|
Units
outstanding–December 31, 2022
|
|
6,416,089
|
$
|
1.04
|
|
1,470,000
|
$
|
0.77
|
Grants
|
|
1,433,000
|
|
1.49
|
|
-
|
|
-
|
Exercises
(1)
|
|
(160,917)
|
|
1.13
|
|
-
|
|
-
|
Forfeitures
|
|
(121,334)
|
|
1.72
|
|
-
|
|
-
|
Units
outstanding–June 30, 2023
|
|
7,566,838
|
$
|
1.12
|
|
1,470,000
|
$
|
0.77
|
Units
vested–June 30, 2023
|
|
4,816,506
|
$
|
0.81
|
|
1,470,000
|
$
|
0.77
|
(1)
The weighted average share
price at the date of exercise was $1.45 for RSUs.
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.
19. ACCUMULATED
OTHER COMPREHENSIVE INCOME
The accumulated
other comprehensive income balance consists of:
|
|
|
|
At June
30
|
|
At December
31
|
(in
thousands)
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
Cumulative
foreign currency translation
|
|
|
$
|
549
|
$
|
420
|
Experience
gains-post employment liability
|
|
|
|
|
Gross
|
|
|
|
1,847
|
|
1,847
|
Tax
effect
|
|
|
|
(485)
|
|
(485)
|
|
|
|
$
|
1,911
|
$
|
1,782
|
20. SUPPLEMENTAL
FINANCIAL INFORMATION
The components of
Operating expenses are as follows:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Cost of goods and
services sold:
|
|
|
|
|
|
|
|
|
Cost
of goods sold-mineral concentrates
|
$
|
-
|
$
|
(444)
|
$
|
-
|
$
|
(444)
|
Operating
overheads:
|
|
|
|
|
|
|
|
|
Mining, other
development expense
|
|
(63)
|
|
(118)
|
|
(118)
|
|
(190)
|
Milling,
conversion expense
|
|
(615)
|
|
(931)
|
|
(1,267)
|
|
(1,555)
|
Less
absorption:
|
|
|
|
|
|
|
|
|
-Mineral
properties
|
|
-
|
|
10
|
|
-
|
|
21
|
-Milling
|
|
-
|
|
-
|
|
-
|
|
(11)
|
Cost of
services-Closed Mines Services
|
|
(2,282)
|
|
(1,875)
|
|
(4,088)
|
|
(3,531)
|
Cost of goods and
services sold
|
|
(2,960)
|
|
(3,358)
|
|
(5,473)
|
|
(5,710)
|
Selling
expenses
|
|
-
|
|
(34)
|
|
-
|
|
(34)
|
Sales
royalties
|
|
-
|
|
(216)
|
|
-
|
|
(216)
|
Reclamation asset
amortization
|
|
(47)
|
|
(46)
|
|
(94)
|
|
(92)
|
Operating
expenses
|
$
|
(3,007)
|
$
|
(3,654)
|
$
|
(5,567)
|
$
|
(6,052)
|
The components of
Other income (expense) are as follows:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Gains (losses)
on:
|
|
|
|
|
|
|
|
|
Foreign
exchange
|
$
|
(354)
|
$
|
487
|
$
|
(191)
|
$
|
287
|
Disposal of
property, plant and equipment
|
|
1,299
|
|
(36)
|
|
1,299
|
|
(36)
|
Fair value
changes:
|
|
|
|
|
|
|
|
|
Investments-equity
instruments (note 7)
|
|
(3,051)
|
|
(9,261)
|
|
(1,885)
|
|
(4,986)
|
Investments-uranium (note
7)
|
|
13,995
|
|
(18,177)
|
|
22,821
|
|
29,579
|
Warrants on
investment (note 7)
|
|
-
|
|
2,308
|
|
-
|
|
1,170
|
Share purchase
warrant liabilities (note 15)
|
|
-
|
|
17,217
|
|
-
|
|
16,733
|
Gain
on recognition of proceeds–UI
Repayment Agreement
|
|
266
|
|
127
|
|
535
|
|
2,713
|
Uranium
investment carrying charges
|
|
(95)
|
|
(93)
|
|
(191)
|
|
(171)
|
Other
|
|
(60)
|
|
(53)
|
|
(142)
|
|
(125)
|
Other
income
|
$
|
12,000
|
$
|
(7,481)
|
$
|
22,246
|
$
|
45,164
|
The
components of Finance expense are as follows:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Interest
income
|
$
|
776
|
$
|
236
|
$
|
1,580
|
$
|
352
|
Interest
expense
|
|
(1)
|
|
(3)
|
|
(2)
|
|
(4)
|
Accretion
expense
|
|
|
|
|
|
|
|
|
Deferred
revenue (note 12)
|
|
(780)
|
|
(739)
|
|
(2,001)
|
|
(1,181)
|
Post-employment
benefits (note 13)
|
|
(5)
|
|
(6)
|
|
(10)
|
|
(11)
|
Reclamation
obligations (note 14)
|
|
(420)
|
|
(356)
|
|
(840)
|
|
(713)
|
Debt
obligations (note 16)
|
|
(8)
|
|
(8)
|
|
(15)
|
|
(17)
|
Finance
expense
|
$
|
(438)
|
$
|
(876)
|
$
|
(1,288)
|
$
|
(1,574)
|
A
summary of depreciation expense recognized in the statement of
income (loss) is as follows:
|
|
Three
Month Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Mining, other
development expense
|
$
|
-
|
$
|
(1)
|
$
|
(1)
|
$
|
(1)
|
Milling,
conversion expense
|
|
(614)
|
|
(929)
|
|
(1,268)
|
|
(1,553)
|
Cost of
services
|
|
(54)
|
|
(44)
|
|
(106)
|
|
(88)
|
Evaluation
|
|
(145)
|
|
(29)
|
|
(289)
|
|
(63)
|
Exploration
|
|
(98)
|
|
(24)
|
|
(194)
|
|
(49)
|
General and
administrative
|
|
(39)
|
|
(76)
|
|
(77)
|
|
(118)
|
Depreciation
expense-gross
|
$
|
(950)
|
$
|
(1,103)
|
$
|
(1,935)
|
$
|
(1,872)
|
A summary of
employee benefits expense recognized in the statement of income
(loss) is as follows:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Salaries and
short-term employee benefits
|
$
|
(3,086)
|
$
|
(2,449)
|
$
|
(5,983)
|
$
|
(6,331)
|
Share-based
compensation (note 18)
|
|
(893)
|
|
(1,022)
|
|
(1,937)
|
|
(1,952)
|
Termination
benefits
|
|
(100)
|
|
(2)
|
|
(100)
|
|
(2)
|
Employee
benefits expense
|
$
|
(4,079)
|
$
|
(3,473)
|
$
|
(8,020)
|
$
|
(8,285)
|
The change in
non-cash operating working capital items in the consolidated
statements of cash flows is as follows:
|
|
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Change in
non-cash working capital items:
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
|
|
|
|
$
|
(1,516)
|
$
|
(583)
|
Inventories
|
|
|
|
|
|
(332)
|
|
721
|
Prepaid expenses
and other assets
|
|
|
|
|
|
277
|
|
427
|
Accounts payable
and accrued liabilities
|
|
|
|
|
|
392
|
|
812
|
Change
in non-cash working capital items
|
|
|
|
|
$
|
(1,179)
|
$
|
1,377
|
21. SEGMENTED
INFORMATION
Business
Segments
The Company
operates in three primary segments – the Mining segment, the
Closed Mine Services segment and the Corporate and Other segment.
The Mining segment includes activities related to exploration,
evaluation and development, mining, milling (including toll
milling) and the sale of mineral concentrates. The Closed Mine
Services segment includes the results of the Company’s
environmental services business which provides mine decommissioning
and other services to third parties. The Corporate and Other
segment includes general corporate expenses not allocated to the
other segments.
For the six
months ended June 30, 2023, reportable segment results were as
follows:
(in
thousands)
|
|
|
Mining
|
Closed
Mines
Services
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
(14)
|
4,589
|
-
|
4,575
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(1,479)
|
(4,088)
|
-
|
(5,567)
|
Exploration
|
|
|
(5,781)
|
-
|
-
|
(5,781)
|
Evaluation
|
|
|
(7,384)
|
-
|
-
|
(7,384)
|
General and
administrative
|
|
|
(19)
|
-
|
(6,444)
|
(6,463)
|
|
|
|
(14,663)
|
(4,088)
|
(6,444)
|
(25,195)
|
Segment income
(loss)
|
|
$
|
(14,677)
|
501
|
(6,444)
|
(20,620)
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Environmental
services
|
|
$
|
-
|
4,589
|
-
|
4,589
|
Toll milling
services-deferred revenue (note 12)
|
|
(14)
|
-
|
-
|
(14)
|
|
|
$
|
(14)
|
4,589
|
-
|
4,575
|
|
|
|
|
|
|
|
Capital additions:
|
|
|
|
|
|
|
Property,
plant and equipment (note 10)
|
$
|
438
|
113
|
834
|
1,385
|
|
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
|
Plant and
equipment
|
|
|
|
|
|
|
Cost
|
|
$
|
99,018
|
4,342
|
6,291
|
109,651
|
Accumulated
depreciation
|
|
|
(33,595)
|
(2,933)
|
(862)
|
(37,390)
|
Mineral
properties
|
|
|
179,357
|
-
|
-
|
179,357
|
|
|
$
|
244,780
|
1,409
|
5,429
|
251,618
|
For the three
months ended June 30, 2023, reportable segment results were as
follows:
(in
thousands)
|
|
|
Mining
|
Closed
Mines
Services
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
968
|
2,523
|
-
|
3,491
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
|
(725)
|
(2,282)
|
-
|
(3,007)
|
Exploration
|
|
|
(1,834)
|
-
|
-
|
(1,834)
|
Evaluation
|
|
|
(4,662)
|
-
|
-
|
(4,662)
|
General and
administrative
|
|
|
-
|
-
|
(3,209)
|
(3,209)
|
|
|
|
(7,221)
|
(2,282)
|
(3,209)
|
(12,712)
|
Segment income
(loss)
|
|
$
|
(6,253)
|
241
|
(3,209)
|
(9,221)
|
|
|
|
|
|
|
|
Revenues-supplemental:
|
|
|
|
|
|
|
Environmental
services
|
|
$
|
-
|
2,523
|
-
|
2,523
|
Toll milling
services-deferred revenue (note 12)
|
|
968
|
-
|
-
|
968
|
|
|
$
|
968
|
2,523
|
-
|
3,491
|
For the six
months ended June 30, 2022, reportable segment results were as
follows:
(in
thousands)
|
|
|
Mining
|
Closed
Mine
Services
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
6,962
|
3,963
|
-
|
10,925
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
$
|
(2,521)
|
(3,531)
|
-
|
(6,052)
|
Evaluation
|
|
|
(11,081)
|
-
|
-
|
(11,081)
|
Exploration
|
|
|
(3,626)
|
-
|
-
|
(3,626)
|
General and
administrative
|
|
|
(20)
|
-
|
(6,803)
|
(6,823)
|
|
|
|
(17,248)
|
(3,531)
|
(6,803)
|
(27,582)
|
Segment income
(loss)
|
|
$
|
(10,286)
|
432
|
(6,803)
|
(16,657)
|
|
|
|
|
|
|
|
Revenues–supplemental:
|
|
|
|
|
|
|
Environmental
services
|
|
$
|
-
|
3,963
|
-
|
3,963
|
Toll milling
services–deferred revenue (note 12)
|
|
3,976
|
-
|
-
|
3,976
|
Uranium
concentrate sale
|
|
2,986
|
-
|
-
|
2,986
|
|
|
$
|
6,962
|
3,963
|
-
|
10,925
|
Capital additions:
|
|
|
|
|
|
|
Property, plant
and equipment
|
|
|
464
|
36
|
3,212
|
3,712
|
|
|
|
|
|
|
|
Long-lived assets:
|
|
|
|
|
|
Plant and
equipment
|
|
|
|
|
|
|
Cost
|
|
|
95,810
|
4,218
|
6,568
|
106,596
|
Accumulated
depreciation
|
|
|
(27,996)
|
(2,994)
|
(2,627)
|
(33,617)
|
Mineral
properties
|
|
|
179,892
|
-
|
-
|
179,892
|
|
|
|
247,706
|
1,224
|
3,941
|
252,871
|
For the three
months ended June 30, 2022, reportable segment results were as
follows:
(in
thousands)
|
|
|
Mining
|
Closed
Mine
Services
|
Corporate
and
Other
|
Total
|
|
|
|
|
|
|
|
Statement of Operations:
|
|
|
|
|
|
|
Revenues
|
|
$
|
4,491
|
2,309
|
-
|
6,800
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operating
expenses
|
|
$
|
(1,779)
|
(1,875)
|
-
|
(3,654)
|
Evaluation
|
|
|
(6,616)
|
-
|
-
|
(6,616)
|
Exploration
|
|
|
(1,060)
|
-
|
-
|
(1,060)
|
General and
administrative
|
|
|
(7)
|
-
|
(2,752)
|
(2,759)
|
|
|
|
(9,462)
|
(1,875)
|
(2,752)
|
(14,089)
|
Segment income
(loss)
|
|
$
|
(4,971)
|
434
|
(2,752)
|
(7,289)
|
|
|
|
|
|
|
|
Revenues–supplemental:
|
|
|
|
|
|
|
Environmental
services
|
|
$
|
-
|
2,309
|
-
|
2,309
|
Toll milling
services–deferred revenue (note 12)
|
|
|
1,505
|
-
|
-
|
1,505
|
Uranium
concentrate sale
|
|
2,986
|
-
|
-
|
2,986
|
|
|
$
|
4,491
|
2,309
|
-
|
6,800
|
22. RELATED
PARTY TRANSACTIONS
Korea
Electric Power Corporation (“KEPCO”) and Korea Hydro
& Nuclear Power (“KHNP”)
Denison and KHNP
Canada (which is an indirect subsidiary of KEPCO through KHNP) are
parties to a strategic relationship agreement (the “KHNP
SRA”). The KHNP SRA provides for a long-term collaborative
business relationship between the parties, which includes a right
of KHNP Canada to nominate one representative to Denison’s
Board of Directors, provided that its shareholding percentage stays
above 5%.
KHNP Canada is
also the majority member of KWULP, which is a consortium of
investors that holds the non-Denison owned interests in Waterbury
Lake Uranium Corporation (“WLUC”) and Waterbury Lake
Uranium Limited Partnership (“WLULP”), entities whose
key asset is the Waterbury Lake property.
Compensation
of Key Management Personnel
Key management
personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the Company,
directly or indirectly. Key management personnel includes the
Company’s executive officers, vice-presidents and members of
its Board of Directors.
The following
compensation was awarded to key management personnel:
|
|
Three
Months Ended
June
30
|
|
Six
Months Ended
June
30
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Salaries and
short-term employee benefits
|
$
|
(546)
|
$
|
(545)
|
$
|
(1,644)
|
$
|
(2,168)
|
Share-based
compensation
|
|
(659)
|
|
(825)
|
|
(1,473)
|
|
(1,648)
|
Key
management personnel compensation
|
$
|
(1,205)
|
$
|
(1,370)
|
$
|
(3,117)
|
$
|
(3,816)
|
23. 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 2023 and
2022, there were no transfers between levels 1, 2 and 3 and there
were no changes in valuation techniques.
The following
table illustrates the classification of the Company’s
financial assets and liabilities within the fair value hierarchy as
at June 30, 2023 and December 31, 2022:
|
|
Financial
|
|
Fair
|
|
June
30,
|
|
December
31,
|
|
|
Instrument
|
|
Value
|
|
2023
|
|
2022
|
(in
thousands)
|
|
Category(1)
|
|
Hierarchy
|
|
Fair
Value
|
|
Fair
Value
|
|
|
|
|
|
|
|
|
|
Financial
Assets:
|
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
Category
B
|
|
|
$
|
46,500
|
$
|
50,915
|
Trade and other
receivables
|
|
Category
B
|
|
|
|
5,659
|
|
4,143
|
Investments
|
|
|
|
|
|
|
|
|
Equity
instruments-shares
|
|
Category
A
|
|
Level
1
|
|
8,483
|
|
8,022
|
Equity
instruments-warrants
|
|
Category
A
|
|
Level
2
|
|
157
|
|
87
|
Restricted
cash and equivalents
|
|
|
|
|
|
|
|
|
Elliot Lake
reclamation trust fund
|
|
Category
B
|
|
|
|
3,607
|
|
3,133
|
Credit
facility pledged assets
|
|
Category
B
|
|
|
|
7,972
|
|
7,972
|
|
|
|
|
|
$
|
72,378
|
$
|
74,272
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities:
|
|
|
|
|
|
|
|
|
Account
payable and accrued liabilities
|
|
Category
C
|
|
|
|
10,461
|
|
10,299
|
Debt
obligations
|
|
Category
C
|
|
|
|
514
|
|
576
|
|
|
|
|
|
$
|
10,975
|
$
|
10,875
|
(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.
24. 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.
MANAGEMENT’S DISCUSSION & ANALYSIS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2023
TABLE OF CONTENTS
LIQUIDITY AND CAPITAL
RESOURCES
OUTLOOK FOR
2023
This
Management’s Discussion and Analysis (‘MD&A’)
of Denison Mines Corp. and its subsidiary companies and joint
arrangements (collectively, ‘Denison’ or the
‘Company’) provides a detailed analysis of the
Company’s business and compares its financial results with
those of the previous year. This MD&A is dated as of August 9,
2023 and should be read in conjunction with the Company’s
unaudited interim condensed consolidated financial statements and
related notes for the three and six months ended June 30, 2023. The
unaudited interim condensed consolidated financial statements are
prepared in accordance with International Financial Reporting
Standards (‘IFRS’) as issued by the International
Accounting Standards Board (‘IASB’), including IAS 34,
Interim Financial
Reporting. Readers are also encouraged to consult the
audited consolidated financial statements and MD&A for the year
ended December 31, 2022. All dollar amounts in this MD&A are
expressed in Canadian dollars, unless otherwise noted.
Additional
information about Denison, including the Company’s press
releases, quarterly and annual reports, Annual Information Form and
Form 40-F is available through the Company’s filings with the
securities regulatory authorities in Canada at www.sedarplus.com
(‘SEDAR+’) and the United States at
www.sec.gov/edgar.shtml (‘EDGAR’).
|
MANAGEMENT’S
DISCUSSION & ANALYSIS
|
Q2 2023 PERFORMANCE
HIGHLIGHTS
■
Feasibility Study for Wheeler River Phoenix deposit yields
significant increase in economic results
In June 2023,
Denison released the results of the Feasibility Study
(‘Phoenix FS’) completed for In-Situ Recovery
(‘ISR’) mining of the high-grade Phoenix uranium
deposit (‘Phoenix’). The Phoenix FS demonstrates robust
economics including:
●
Base case pre-tax Net Present
Value (‘NPV’) (8%) of $2.34 billion (100%
ownership-basis) representing a 150% increase in the base-case
pre-tax NPV8% for Phoenix from
the 2018 Pre-Feasibility Study (‘2018
PFS’).
●
Very robust base-case pre-tax
Internal Rate of Return (‘IRR’) of 105.9%.
●
Adjusted base case after-tax
NPV8%
of $1.56 billion (100% basis) and IRR of 90.0% – with
Denison’s effective 95% interest in the project equating to
an adjusted base case after-tax NPV8% of $1.48
billion.
●
Base case pre-tax and
after-tax (adjusted) payback period of 10 months – equating
to a reduction of 11 months for the pre-tax payback period from the
2018 PFS.
●
Optimized production profile,
based on ISR mine planning efforts evaluating production potential
for individual well patterns – resulting in an increase to
the planned rate of production by approximately 43% during the
first five years of operations.
●
Estimated pre-production
capital costs of under $420 million (100% basis), yielding an
impressive base-case after-tax (adjusted) NPV to initial capital
cost ratio in excess of 3.7 to 1.
●
Robust economics that easily
absorb cost-inflation and design changes impacting both operating
and capital costs, confirming Phoenix’s position with
estimated cash operating and all-in costs expected to be amongst
the lowest-cost uranium mines in the world.
●
Phoenix FS plans aligned and
costed to meet or exceed environmental criteria expected to be
required by the ongoing regulatory approval process.
●
Updated mineral resource
estimate, reflecting the results of 70 drill holes completed in
support of ISR de-risking and resource delineation activities,
which has upgraded 30.9 million pounds U3O8 into measured
mineral resources, and increased the average grade of the Zone A
high-grade domain. This zone is now estimated to contain 56.3
million pounds U3O8 in Measured and
Indicated mineral resources at an average grade of 46.0%
U3O8.
●
Upgraded 3.4 million pounds
U3O8 into Proven
mineral reserves, representing the equivalent of 85% of production
planned during the first calendar year of operations.
■
Completion of Phoenix ISR De-Risking and Transition to Engineering
Design
The Phoenix FS
reflects independent third-party validation of the selection of the
ISR mining method for Phoenix and builds on the findings from a
comprehensive and rigorous multi-year technical de-risking process
highlighted by the highly successful completion of the leaching and
neutralization phases of the Phoenix Feasibility Field Test
(‘FFT’) in late 2022. Through the technical de-risking
process, Denison has acquired extensive deposit-specific data and
developed a robust ISR mine planning model that involved evaluation
of the production potential for individual well
patterns.
With technical
de-risking of the project substantially complete, front-end
engineering design (‘FEED’) efforts to support the
advancement of the planned Phoenix operation are already
significantly progressed and the Company is on track to transition
into detailed design efforts, consistent with the Company's Outlook
for 2023, before the end of the year.
■
Cost update to the 2018 PFS for
Wheeler River Gryphon deposit (‘Gryphon’)
confirms the
project remains to be positioned amongst the lowest-cost uranium
mines in the world
A cost update
(‘Gryphon Update’) to the 2018 PFS for conventional
underground mining of the basement-hosted Gryphon was completed.
The scope of the Gryphon Update was targeted at the review and
update of capital and operating costs. Mining and processing plans
remain largely unchanged from the 2018 PFS aside from minor
scheduling and construction sequencing optimizations. The key
points include:
●
Base case pre-tax NPV (8%) of
$1.43 billion (100% basis) is a 148% increase in the base-case
pre-tax NPV8% for Gryphon from
the 2018 PFS.
●
Strong base-case pre-tax IRR
of 41.4%.
●
Base case after-tax
NPV8%
of $864.2 million (100% basis) and IRR of 37.6% – with
Denison’s effective 95% interest in the project equating to a
base case after-tax NPV8% of $821.0
million.
●
Base case pre-tax payback
period of 20 months, and base case after-tax payback period of 22
months – equating to a reduction of 17 months for the pre-tax
payback period from the 2018 PFS.
Importantly,
Gryphon remains a highly valuable project that provides Denison
with an additional source of low-cost potential production to
deploy significant free cash flows expected from
Phoenix.
Denison Mines
Corp. was formed under the laws of Ontario and is a reporting
issuer in all Canadian provinces and territories. Denison’s
common shares are listed on the Toronto Stock Exchange (the
‘TSX’) under the symbol ‘DML’ and on the
NYSE American exchange under the symbol
‘DNN’.
Denison is a
uranium exploration and development company with interests focused
in the Athabasca Basin region of northern Saskatchewan, Canada. The
Company has an effective 95% interest in its flagship Wheeler River
Uranium Project, which is the largest undeveloped uranium project
in the infrastructure rich eastern portion of the Athabasca Basin
region of northern Saskatchewan. In mid-2023, a Feasibility Study
was completed for Wheeler River’s Phoenix deposit as an ISR
mining operation, and an update to the previously prepared 2018 PFS
was completed for Wheeler River’s Gryphon deposit as a
conventional underground mining operation. Based on the respective
studies, both deposits have the potential to be competitive with
the lowest cost uranium mining operations in the world. Permitting
efforts for the planned Phoenix ISR operation commenced in 2019 and
have advanced significantly, with licensing in progress and a draft
Environmental Impact Statement (‘EIS’) submitted for
regulator and public review October 2022.
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, plus a 25.17% interest in the
Midwest Main and Midwest A deposits and a 67.41% 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 Japan (Canada) Exploration Company, Ltd
(‘JCU’), Denison holds additional interests in various
uranium project joint ventures in Canada, including the Millennium
project (JCU, 30.099%), the Kiggavik project (JCU, 33.8118%) and
Christie Lake (JCU, 34.4508%).
Denison’s
exploration portfolio includes further interests in properties
covering approximately 285,000 hectares in the Athabasca Basin
region.
Denison is also
engaged in post-closure mine care and maintenance services through
its Closed Mines group, which manages Denison’s reclaimed
mine sites in the Elliot Lake region and provides related services
to third party projects.
SELECTED FINANCIAL INFORMATION
(in
thousands)
|
|
As at
June 30,
2023
|
|
As at
December 31,
2022
|
|
|
|
|
|
Financial Position:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
46,500
|
$
|
50,915
|
Working
capital(1)
|
$
|
51,818
|
$
|
53,660
|
Investments in
uranium
|
$
|
185,357
|
$
|
162,536
|
Property, plant
and equipment
|
$
|
251,618
|
$
|
253,505
|
Total
assets
|
$
|
532,625
|
$
|
515,796
|
Total long-term
liabilities(2)
|
$
|
63,414
|
$
|
61,365
|
(1)
Working capital is a non-IFRS
financial measure and is calculated as the value of current assets
less the value of current liabilities, excluding non-cash current
liabilities (i.e. working capital at June 30, 2023 excludes
$4,536,000 from the current portion of deferred revenue (December
31, 2022 – $4,915,000)).
(2)
Predominantly comprised of
the non-current portion of deferred revenue, non-current
reclamation obligations, and deferred income tax
liabilities.
SELECTED QUARTERLY FINANCIAL INFORMATION
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
(in
thousands, except for per share amounts)
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
3,491
|
$
|
1,084
|
$
|
2,977
|
$
|
3,043
|
Net earnings
(loss)
|
$
|
61
|
$
|
(2,400)
|
$
|
(5,739)
|
$
|
(6,383)
|
Basic and diluted
earnings (loss) per share
|
$
|
0.00
|
$
|
(0.00)
|
$
|
(0.00)
|
$
|
(0.01)
|
|
|
|
|
2022
|
|
2022
|
|
2021
|
|
2021
|
(in
thousands, except for per share amounts)
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
6,800
|
$
|
4,125
|
$
|
3,337
|
$
|
9,541
|
Net earnings
(loss)
|
$
|
(16,147)
|
$
|
42,623
|
$
|
(2,648)
|
$
|
32,866
|
Basic and diluted
earnings (loss) per share
|
$
|
(0.02)
|
$
|
0.05
|
$
|
(0.01)
|
$
|
0.04
|
|
|
|
|
|
|
|
|
|
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 revenue
rates were updated for changes to future toll milling production
rates at McClean Lake in the first quarters of both 2022 and 2023.
During the first quarter of 2023, this update resulted in negative
revenue. See RESULTS OF OPERATIONS below for further
details.
●
Revenues and operating
expenses from the Closed Mines group fluctuate due to the timing of
projects, which vary throughout the year in the normal course of
business.
●
During the second quarter of
2022, the Company recognized $2,986,000 of non-recurring revenue
from mineral sales.
●
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. However, both the 2021 and 2022 exploration programs
at Wheeler River took place during the third and fourth quarters
due to the timing of ISR field programs.
●
Other income and expense
fluctuate 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
impact of fair value changes on the Company’s net earnings /
loss was particularly significant in the first and second quarters
of 2022 and the second quarter of 2023. See OTHER INCOME below for
more details.
●
The Company’s results
are also impacted, from time to time, by other non-recurring events
arising from its ongoing activities, as discussed below, where
applicable.
REVENUES
McClean Lake Uranium Mill
McClean Lake is
located on the eastern edge of the Athabasca Basin in northern
Saskatchewan, approximately 750 kilometres north of Saskatoon.
Denison holds a 22.5% ownership interest in the MLJV and the
McClean Lake uranium mill, one of the world’s largest uranium
processing facilities, which is contracted to process ore from the
Cigar Lake mine under a toll milling agreement. The MLJV is a joint
venture between Orano Canada Inc. (‘Orano Canada’) with
a 77.5% interest and Denison with a 22.5% interest.
In February 2017,
Denison closed an arrangement with Ecora Resources PLC
(‘Ecora’, then known as Anglo Pacific Group PLC) and
one of its wholly owned subsidiaries (the ‘Ecora
Arrangement’) under which Denison received an upfront payment
of $43,500,000 in exchange for its right to receive future toll
milling cash receipts from the MLJV under the then current toll
milling agreement with the Cigar Lake Joint Venture
(‘CLJV’) from July 1, 2016 onwards. The Ecora
Arrangement consists of certain contractual obligations of Denison
to forward to Ecora the cash proceeds of future toll milling
revenue earned by the Company related to the processing of the
specified Cigar Lake ore through the McClean Lake mill and, as
such, the upfront payment was accounted for as deferred
revenue.
During the three
and six months ended June 30, 2023, the McClean Lake mill processed
3.8 and 7.6 million pounds U3O8, respectively,
for the CLJV (June 30, 2022 – 5.4 million and 9.1 million
pounds U3O8) and Denison
recorded toll milling revenue of $968,000 and negative net toll
milling revenue of $14,000, respectively (June 30, 2022 –
$1,505,000 and $3,976,000). The decrease in toll milling revenue in
the current quarter, as compared to the prior year, is due to the
mill processing fewer pounds U3O8 for the CLJV. The
decrease in toll milling revenue in the six months ending June 30,
2023, as compared to the prior year, is due to both a decrease in
the quantity of U3O8 processed for the
CLJV, as well as a negative $1,946,000 non-cash cumulative
accounting adjustment which was recorded in the first quarter of
2023 and which more than offset the revenue recognized from the
first quarter’s toll milling activity of $964,000. By
comparison, in the first quarter of 2022, the Company recognized
toll milling revenue of $1,027,000 and a $1,444,000 positive
non-cash cumulative accounting adjustment. The true ups recorded in
the first quarter of both years were driven by changes in the
estimated timing of the processing of the Cigar Lake ore. In the
first quarter of 2022, the operators of the Cigar Lake mine
announced a reduction in forecasted mine production from 18 million
pounds U3O8 per year to 15
million pounds U3O8 per year in 2022
and 2023, and then to 13.5 million pounds U3O8 per year
thereafter. In the first quarter of 2023, the operators of the
Cigar Lake mine announced that forecasted future mine production
was increased back to 18 million pounds U3O8 per year. Under
IFRS 15, Revenue from Contracts
with Customers, the change in the estimated timing of the
toll milling of the CLJV ores in 2022 resulted in an increase to
the implied financing component of the toll milling transaction,
thus increasing the total deferred revenue to be recognized over
the life of the toll milling contract as well as the deferred
revenue drawdown rate. The updated drawdown rate was applied
retrospectively to all pounds produced for the CLJV since the
inception of the Ecora Arrangement in July 2016, resulting in the
increase in revenue in the three months ended March 31, 2022. This
was effectively reversed in the first quarter of 2023, resulting in
the current period reduction in revenue.
During the three
and six months ended June 30, 2023, the Company also recorded
accounting accretion expense of $779,000 and $2,001,000,
respectively, on the toll milling deferred revenue balance (June
30, 2022 – $739,000 and $1,181,000). While the annual
accretion expense will decrease over the life of the contract as
the deferred revenue liability decreases over time, the increase in
accretion expense in the three and six months ended June 30, 2023,
as compared to the prior year, was predominantly due a $483,000
true up to increase the life-to-date accretion expense recorded in
the first quarter of 2023 due to the change in the timing in the
estimated CLJV toll milling activities discussed above (June 30,
2022 – $297,000 true up which reduced the life-to-date
accretion expense)
The impact of the
current and prior period true-ups to revenue and accretion are
non-cash.
Mineral Sales
Mineral sales
revenue for the three and six months ended June 30, 2023 was $nil
and $nil, respectively (June 30, 2022 – $2,986,000 and
$2,986,000). Mineral sales revenue earned in the second quarter of
2022 was from the sale of 40,000 pounds U3O8 from inventory at
an average price of $74.65 (US$59.25) per pound. The inventory sold
in the second quarter of 2022 was from the Company’s share of
production from the SABRE test mining program completed at McClean
Lake in 2021.
Closed Mine Services
Denison’s
Closed Mines group 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 related services for certain
third-party projects.
Revenue from
Closed Mines services during the three and six months ended June
30, 2023 was $2,523,000 and $4,589,000, respectively (June 30, 2022
- $2,309,000 and $3,963,000). The increase in revenue in the three
and six months ended June 30, 2023, as compared to 2022, was due to
an increase in care and maintenance activities at certain
sites.
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 three and six months
ended June 30, 2023 were $725,000 and $1,479,000, respectively
(June 30, 2022 – $1,779,000 and $2,521,000).
Included in
operating expense is depreciation expense relating to the McClean
Lake mill of $614,000 and $1,268,000, respectively (June 30, 2022
– $929,000 and $1,553,000), as a result of processing
approximately 3.8 and 7.6
million pounds U3O8,
respectively for the CLJV
(June 30, 2022 – 5.4 million and 9.1 million
pounds).
Operating
expenses for the six months ended June 30, 2022 also includes
$444,000 in cost of sales, selling expenses of $34,000, and sales
royalties and resource surcharges of $216,000 related to the sale
of 40,000 pounds of U3O8.
Closed Mine Services
Operating
expenses during the three and six months ended June 30, 2023
totaled $2,282,000 and $4,088,000 respectively (June 30, 2022 -
$1,875,000 and $3,531,000). 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
period, as compared to the prior year, is predominantly due to
increased activity at certain care and maintenance
sites.
MINERAL PROPERTY EVALUATION
During the three
and six months ended June 30, 2023, Denison’s share of
evaluation expenditures was $4,662,000 and $7,384,000 (June 30,
2022 –$6,616,000 and $11,081,000). The decrease in evaluation
expenditures, compared to the prior period, was due to a decrease
in Wheeler River ISR field activities as well as a decrease in
costs associated with the FFT, which transitioned to
care and maintenance for the winter. Commissioning of the final
phases of the FFT was completed late in the second quarter of
2023.
The following
table summarizes the evaluation activities completed during the six
months ended June 30, 2023.
PROJECT EVALUATION ACTIVITIES
|
Property
|
Denison’s ownership
|
Evaluation activities
|
Wheeler
River
|
95%(1)
|
Engineering, FS,
metallurgical testing, FFT care and maintenance and Phase 3
commissioning, environmental and sustainability activities, EIS
regulatory reviews, construction license application
submission.
|
|
Waterbury
Lake
|
67.41%(2)
|
Project planning,
initiation of 2023 field activities including drilling and
development of five HQ wells.
|
|
Midwest
|
25.17%
|
Project planning,
initiation of 2023 field activities including permeameter testing
and hydrogeological characterization of cores.
|
|
|
|
|
|
Notes:
(1)
The Company’s effective
ownership interest as at June 30, 2023, including the indirect 5%
ownership interest held through JCU.
(2)
Represents Denison’s
ownership position as at November 30, 2022. Korea Waterbury Uranium
Limited Partnership (‘KWULP’), which holds the
non-Denison interests in Waterbury Lake, have deferred their
funding decision regarding the 2023 evaluation program, and Denison
is currently funding 100% of project expenditures.
Wheeler River Uranium
Project
On June 26, 2023
Denison announced the results of (i) the Phoenix FS completed for
ISR mining of the high-grade Phoenix deposit and (ii) an updated
Gryphon PFS for conventional underground mining of the
basement-hosted Gryphon deposit.
The Phoenix FS
was completed by Wood Canada Limited (‘Wood’), WSP USA
Environment and Infrastructure Inc. (‘WSP’), SRK
Consulting (Canada) Inc. (‘SRK’), and Newmans
Geotechnique Inc. (‘Newmans’). The study confirms
robust economics and the technical viability of an ISR uranium
mining operation with low initial capital costs and a high rate of
return.
The Phoenix FS
reflects several design changes and the results of a rigorous
technical de-risking program completed by Denison over the last 4.5
years following the publication of the 2018 PFS, which was
highlighted by the then-novel selection of the ISR mining method
for Phoenix.
With the benefit
of extensive metallurgical and field testing of all key elements of
the proposed ISR mining operation, and current cost estimates
reflecting recent inflationary pressures, the Phoenix FS is
expected to provide Denison with an excellent basis to advance
engineering designs in support of a future final investment
decision (‘FID’).
See details above
and the following tables for the highlights of the Phoenix
FS.
Summary of Economic Results (100% Basis) – Base
Case
|
Uranium selling
price
|
UxC Spot Price(1)
(~US$66 to
US$70/lb U3O8)
|
Exchange Rate
(US$:CAD$)
|
1.35
|
Discount
Rate
|
8%
|
Operating profit
margin(2)
|
90.9%
|
|
|
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
|
$2.34 billion
(+150%)
|
Pre-tax
IRR(3)
|
105.9%
|
Pre-tax payback
period(5)
|
~10
months
|
|
|
Post-tax
NPV8%(3)
|
$1.43
billion
|
Post-tax
IRR(3)
|
82.3%
|
Post-tax payback
period(5)
|
~11
months
|
|
|
Adjusted Post-tax
NPV8%(3)(6)
|
$1.56
billion
|
Adjusted Post-tax
IRR(3)(6)
|
90.0%
|
Adjusted Post-tax
payback period(3)(6)
|
~10
months
|
Notes
(1)
Spot price
forecast is based on “Composite Midpoint” scenario from
UxC’s UMO (defined below) and is stated in constant
(not-inflated) dollars. See Denison news release dated June 26,
2023 and the Wheeler Technical Report (defined below) for
details.
(2)
Operating
profit margin is calculated as aggregate uranium revenue less
aggregate operating costs, divided by aggregate uranium revenue.
Operating costs exclude all royalties, surcharges and income
taxes.
(3)
NPV and IRR
are calculated to the start of construction activities for the
Phoenix operation and excludes $67.4 million in pre-FID
expenditures.
(4)
Change from
2018 PFS is computed by reference to the same scenario from the
2018 PFS, adjusted to incorporate certain pre-FID costs for
consistent comparability.
(5)
Payback
period is stated as number of months to payback from the start of
uranium production.
(6)
The Adjusted
Post-tax NPV, IRR and payback period are based on the
“adjusted post-tax” scenario, which includes the
benefit of certain entity level tax attributes which are expected
to be available and used to reduce taxable income from the Phoenix
operation. See Denison news release dated June 26, 2023 and the
Wheeler Technical Report (defined below) for details.
Summary of Key Phoenix Operational Parameters (100%
basis)
|
Mine
life
|
10
years
|
Proven &
Probable reserves(1)
|
56.7 million lbs
U3O8 (219,000 tonnes
at 11.7% U3O8)
|
First 5 years of
reserves(2)
|
41.9 million lbs
U3O8 (Average 8.4
million lbs U3O8 /
year)
|
Remaining years
of reserves
|
14.8 million lbs
U3O8 (Average 3.0
million lbs U3O8 /
year)
|
Initial capital
costs(3)
|
$419.4
million
|
Average cash
operating costs
|
$8.51 (US$6.28)
per lb U3O8
|
All-in
cost(4)
|
$21.73 (US$16.04)
per lb U3O8
|
Notes:
(1)
See Denison press released
dated June 26, 2023 for additional details regarding Proven &
Probable reserves.
(2)
The first five years is
determined by reference to the 60 month period that commences at
the start of operations.
(3)
Initial capital costs exclude
$67.4 million in estimated pre-FID expenditures expected to be
incurred before the projects FID has been made.
(4)
All-in cost is estimated on a
pre-tax basis and includes all project operating costs, capital
costs post-FID, and decommissioning costs divided by the estimated
number of pounds U3O8 to be
produced.
The Gryphon
Update was prepared by Engcomp Engineering and Computing
Professionals Inc. (‘Engcomp’), SLR International
Corporation (‘SLR’), Stantec Consulting Ltd.
(‘Stantec’), and Hatch Ltd. (‘Hatch’), and
is largely based on the 2018 PFS, with efforts targeted at the
review and update of capital and operating costs, as well as
various minor scheduling and design optimizations. The study
remains at the PFS level of confidence.
Overall, the
Gryphon Update demonstrates that the underground development of
Gryphon is a positive potential future use of cash flows generated
from Phoenix, as it is able to leverage existing infrastructure to
provide an additional source of low-cost production.
See details above
and the following tables for the highlights of the Gryphon
Update.
Summary of Economic Results (100% Basis) – Base
Case
|
Uranium selling
price
|
US$75/lb U3O8(1)
(Fixed selling
price)
|
Exchange Rate
(US$:CAD$)
|
1.35
|
Discount
Rate
|
8%
|
Operating profit
margin(3)
|
83.0%
|
|
|
Pre-tax
NPV8%(3) (Change from 2018 PFS)(4)
|
$1.43 billion (+148%)
|
Pre-tax
IRR(3)
|
41.4%
|
Pre-tax payback
period(5)
|
~ 20 months
|
|
|
Post-tax
NPV8%(3)(6)
|
$864.2 million
|
Post-tax
IRR(3)(6)
|
37.6%
|
Post-tax payback
period(5)(6)
|
~ 23 months
|
Notes
(1)
Fixed selling
price is based on the forecasted annual “Composite
Midpoint” long-term uranium price from UxC’s
Q2’2023 UMO (defined below) and is stated in constant
(not-inflated) dollars. See Denison news release dated June 26,
2023 and the Wheeler Technical Report (defined below) for
details.
(2)
Operating
profit margin is calculated as aggregate uranium revenue less
aggregate operating costs, divided by aggregate uranium revenue.
Operating costs exclude all royalties, surcharges and income
taxes.
(3)
NPV and IRR
are calculated to the start of construction activities for the
Gryphon operation, and excludes $56.5 million in pre- FID
expenditures.
(4)
Change from
2018 PFS is computed by reference to the same scenario from the
2018 PFS, adjusted to incorporate certain pre-FID costs for
consistent comparability.
(5)
Payback
period is stated as number of months to payback from the start of
uranium production.
(6)
There is no
“adjusted” post-tax case for Gryphon, given that the
entity level tax attributes of the WRJV owners are assumed to have
been fully depleted by the Phoenix operation. See Denison news
release dated June 26, 2023 and the Wheeler Technical Report
(defined below) for details.
Summary of Key Gryphon Operational Parameters (100%
basis)
|
Mine
life
|
6.5
years
|
Probable
reserves(1)
|
49.7 million lbs
U3O8 (1,275,000 tonnes
at 1.8% U3O8)
|
Average annual
production
|
7.6 million lbs
U3O8
|
Initial capital
costs(2)
|
$737.4
million
|
Average cash
operating costs
|
$17.27 (US$12.75)
per lb U3O8
|
All-in
cost(3)
|
$34.50 (US$25.47)
per lb U3O8
|
Notes:
(1)
See Denison press released
dated June 26, 2023 for additional details regarding Probable
reserves.
(2)
Initial capital costs exclude
$56.5 million in estimated pre-FID expenditures expected to be
incurred before the project’s FID has been made.
(3)
All-in cost is estimated on a
pre-tax basis and includes all project operating costs, capital
costs post-FID, and decommissioning costs divided by the estimated
number of pounds U3O8 to be
produced.
Further details
regarding Wheeler River, including the estimated mineral reserves
and resources, are provided in the Technical Report for the Wheeler
River project titled ‘NI 43-101 Technical Report on the
Wheeler River Project, Athabasca Basin, Saskatchewan, Canada’
with an effective date of June 23, 2023 (‘Wheeler Technical
Report’). A copy of the Wheeler Technical Report is available
on Denison’s website and under its profile on each of SEDAR+
and EDGAR.
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.
Evaluation Program
Denison’s
2023 evaluation plans for Wheeler River include (1) completing the
third and final phase of the FFT, (2) completing the Phoenix FS,
(3) completing FEED optimization and initiating detailed design
engineering, (4) advancing through the regulatory review of the
draft EIS submitted in 2022, (5) initiating activities required to
license and permit construction of the proposed Phoenix ISR
operation, and (6) advancing the negotiation of impact benefit type
agreements with interested parties.
During the three
and six months ended June 30, 2023, Denison’s share of
evaluation costs at Wheeler River was $3,768,000 and $6,308,000,
respectively (June 30, 2022 – $7,074,000 and
$11,528,000).
Engineering Activities
Feasibility Field Test
The
FFT was designed to use the existing commercial-scale ISR test
pattern installed at Phoenix in 2021 in order to facilitate a
combined evaluation of the Phoenix deposit's hydraulic flow
properties, with the leaching characteristics that were previously
assessed through the metallurgical core-leach testing
program.
The
successful completion of the leaching and neutralization phases of
the FFT in the fourth quarter of 2022 provided further verification
of the permeability, leachability, reclamation, and containment
parameters needed for the successful application of the ISR mining
method at the Phoenix deposit. During the first half of 2023,
project planning, procurement and commissioning for the final stage
of the FFT, the recovered solution management phase, were
completed. During the recovered solution management phase, a solid
mineralized precipitate will be created from the solutions
recovered in 2022 during the leaching and neutralization phases of
the test. As part of the process, a treated effluent solution will
be produced to meet permit criteria for re-injection back into the
mineralized formation. The solid mineralized precipitate will be
stored on surface at site and will be monitored in further care and
maintenance activities. The recovered solution management phase is
currently scheduled for completion during the summer, with
decommissioning and reclamation activities planned to
follow.
Metallurgical Testing
During
the first half of 2023, the metallurgical test program continued at
Saskatchewan Research Council Laboratories (‘SRC’) in
Saskatoon including the continuation of core leach testing to
further explore the recovery curve of high-grade core, and the
optimization of mining solution management through the recycling of
treated effluent and/or the use of barren solution as lixiviant.
Other areas of optimization include the development and use of a
metallurgical simulation model for the Phoenix plant.
Feasibility Study
The
results of the Phoenix FS were released in June 2023.
The Phoenix mineral resource estimate has been
updated to reflect 70 additional drill holes completed since the
previous mineral resource estimate from 2018. The additional
drilling consisted primarily of test wells installed to support ISR
de-risking activities and certain targeted resource definition
drill holes. As a result of the additional drilling, 30.9 million
pounds U3O8 (64,200 tonnes at 21.8% U3O8)
have been upgraded from Indicated mineral resources to Measured
mineral resources in recognition of the increased confidence in
certain areas of Phoenix Zone A.
Phoenix
is planned to be the first uranium ISR mining operation in the
Athabasca Basin region. Comprehensive field and laboratory test
work has been completed to de-risk the use of the ISR mining method
at the Phoenix deposit –including the highly successful
completion of the leaching and neutralization phases of the FFT at
Phoenix in the fall of 2022. Over 3,300 data points have been
collected within Phoenix to advance hydrogeological evaluations,
and extensive groundwater flow modelling has been completed to
develop an advanced three-dimensional estimation of the subsurface
flows within and surrounding the Phoenix deposit. The data allowed
for modelling of complex hydrogeological and geochemical datasets,
which together with the uranium recovery curve, were used to
estimate the rate of uranium dissolution within the orebody and
facilitate the detailed wellfield design and production planning
process.
Mining
is planned to occur over a 10-year period, spanning 11 calendar
years, with partial years of production occurring in both the first
and final calendar year of the production plan. Progressive
reclamation and decommissioning is planned to commence in each
phase of the ore zone once production has ceased.
The Proven and Probable mineral reserves at
Phoenix are estimated to be 56.7 million pounds
U3O8
(219,000 tonnes at 11.7% U3O8). This estimate is based on the aggregate mine
feed to the plant and represents 80.6% recovery of the total
available uranium (U3O8)
in the Measured and Indicated mineral resources. Proven mineral
reserves are those which were subject to a recovery test during the
FFT in 2022.
Consistent
with the 2018 PFS, the Phoenix FS calls for the construction of a
processing plant on the Wheeler River site, which has been designed
to receive uranium bearing solution (‘UBS’) from the
wellfield for processing to a finished yellowcake product that
meets industry standards.
An
acidic lixiviant solution is prepared in the processing plant and
transferred to an injection solution handling system for
distribution in the wellfield. The solution is injected through a
series of wells arranged in a pattern surrounding extraction /
recovery wells, which are designed to pump the UBS up to surface
once the lixiviant has travelled through the ore zone and dissolved
the uranium from the host rock.
Once the UBS is received at the processing plant,
removal of impurities such as iron (Fe) and radium (Ra) occur via
Stage 1 (Fe/Ra) precipitation. Next the purified leach solution
feeds the Stage 2 yellowcake precipitation circuit and the
yellowcake product is dried and packaged for shipment. The
processing plant has been designed based on an average uranium head
grade of the UBS recovered from the wellfield of 22 grams per litre
and is expected to recover 96.5% of the uranium feed contained in
UBS after a 6 month ramp up period of the plant (when recovery is
expected to be initially 93.4%). Taken together with planned
subsequent recoveries of uranium contained in the Stage 1 (Fe/Ra)
precipitation product, total recovered uranium of 56.2 million
pounds U3O8
is planned to be available for sale
– representing a combined 99% recovery
rate.
Overall,
the processing plant flowsheet remains largely consistent with the
2018 PFS; however, additional provisions have been included for
effluent treatment via a three-stage neutralization process.
Whereas the 2018 PFS assumed a “closed loop” processing
system, the Phoenix FS design is aligned with the engineering
components and criteria included in the Environmental Assessment
(‘EA’) for the project, which allow for the treatment
of process solutions and controlled release of a treated effluent
to the environment. This is an example of how the iterative nature
of the EA process has informed project designs during the Phoenix
FS process, to ensure that the plans are aligned and costed to meet
or exceed environmental criteria expected to be required by the
ongoing regulatory approval process. While this design for effluent
treatment has been adopted for the Phoenix FS, the potential
remains for ongoing FEED studies to optimize the processing plant
design
The
Phoenix FS was prepared by Wood PLC, as the independent lead
author, with a level of engineering design necessary to support a
Class 3 capital cost estimate (AACE international standard with an
accuracy of -15% /+25%).
Capital Costs
The estimated initial direct capital costs of $273.8
million represent a 32% increase compared to the initial direct
capital costs from 2018 PFS, which have been adjusted to reflect
the movement of offsite infrastructure costs from direct costs to
Other (owner’s) costs. The increase in initial direct capital
costs reflects recent inflationary trends in labour and materials
costs and the impact of several design changes resulting from the
substantive advancement of project designs from the 2018 PFS.
Importantly, the design changes in the Phoenix FS reflect (i)
modifications necessary to allow for production plan optimizations,
leading to a 43% increase in the rate of production during the
first five years of production, (ii) choices made as a result of
the iterative EA evaluation process, and (iii) results of the
multi-year technical de-risking program.
Initial
capital costs are expected to be incurred during a 24-month
construction period that will include the establishment of site
infrastructure, as well as the freeze wall perimeter around the
Phase 1 mining zone and initial wellfield development within Phase
1.
Phoenix Capital Costs ($ millions)
|
|
Initial
|
Sustaining
|
Total
|
Wellfield
|
$63.0
|
$177.1
|
$240.1
|
ISR
processing plant
|
$102.6
|
$-
|
$102.6
|
Surface
facilities
|
$14.7
|
$2.1
|
$16.8
|
Utilities
|
$34.8
|
$-
|
$34.8
|
Electrical
|
$19.1
|
$-
|
$19.1
|
Civil
and earthworks
|
$39.6
|
$-
|
$39.6
|
Decommissioning
|
$-
|
$88.8
|
$88.8
|
Subtotal – Direct Costs
|
$273.8
|
$268.0
|
$541.8
|
Indirect
costs
|
$70.5
|
$31.6
|
$102.1
|
Other
(owner’s) costs
|
$32.7
|
$-
|
$32.7
|
Contingency
|
$42.6
|
$23.3
|
$65.9
|
Total Capital Costs
|
$419.4
|
$322.9
|
742.3
|
Contingencies
reflect approximately 11% of total capital costs, which is
considered appropriate given the estimate was prepared to meet AACE
Class 3 requirements, as well as Denison’s significant
experience with key capital cost drivers through the completion of
multiple field test programs at Phoenix since the 2018
PFS.
Taken
together with estimated indirect costs, owner’s costs,
sustaining and decommissioning capital costs, contingencies, and
with the reallocation of certain costs to the pre-FID period, total
life of mine capital costs are estimated at $742.3 million. This
represents a 74% increase in life of mine capital costs compared to
the 2018 PFS.
As is
demonstrated by the project’s current NPV, the economic
outcome of the project has not been adversely impacted by the
increase in life of mine capital costs. Significant contributors to
the overall increase in capital costs include the wellfield, ISR
processing plant, and decommissioning costs, as further described
below:
Wellfield
+$141.0
million
|
The increase
includes the adoption of a phased “freeze wall” design
to replace the novel “freeze dome” concept included in
2018 PFS. The freeze dome introduced significant technical risk to
the ISR mining process and added complexity from an environmental
protection standpoint. The cost of the freeze dome was included in
initial capital costs, whereas the cost of the freeze wall is
spread over the life of mine, thus significantly reducing the
impact to the NPV from the overall increase in capital costs.
Materials and installation costs for the ISR injection and
extraction wells are now based on the Company’s actual
experience in installing both large and small-diameter test wells
during the de-risking process, providing a much more accurate
estimate of costs compared to the 2018 PFS.
|
Processing
plant
+$47.1
million
|
The increase
reflects a variety of design adjustments to the processing plant,
including those which enable an increase in the planned production
rate by 43% during the first 5 years, which has a positive impact
on the NPV.
|
Decommissioning
+$60.2
million
|
The increase
reflects the incorporation of costs associated with ore zone
groundwater remediation to achieve targets proposed in the EA; more
detailed management and regulatory cost requirements, improved
accuracy in well decommissioning activities, process plant
decontamination and demolition including transport and disposal of
waste materials, additional costs for decommissioning larger
industrial water treatment facilities, and environmental monitoring
labour and analytical costs. As these increased capital costs are
primarily expected to occur at the end of the mine life, the impact
to the NPV from the increased capital costs is
minimized.
|
Operating Costs
Average estimated operating costs of $8.51
(US$6.28) per pound U3O8
produced remain highly competitive
amongst the lowest-cost uranium mining operations globally.
Operating costs during the first five years of production are
expected to be $6.64 (US$4.90) per pound U3O8,
benefitting from the increased scale of operations and higher
concentrations of uranium contained in recovered UBS. During the
remaining years of production, operating costs are expected to be
$13.69 (US$10.10) per pound U3O8.
As
a proportion of operating costs per pound, processing costs have
increased from the 2018 PFS, now accounting for nearly 62%, as
compared to 45% in the 2018 PFS. The biggest contributors to the
increased processing costs include reagent usage, as well as
estimated costs for reagents, fuel/propane, and
labour.
Changes
to reagent usage reflect the results of the Company's multi-year
technical de-risking process, which has provided a robust data set
of metallurgical tests on which the current estimate of reagent
usage has been based, as compared to limited preliminary leach data
used for the 2018 PFS.
The
cost of reagents, fuel/propane, and labour reflect the impact of
inflation and supply chain challenges experienced through 2022 and
into 2023. Based on the timing of this study, reagent and
fuel/propane prices used may be reflective of "peak inflation"
pricing and present a possible opportunity for optimization in
future years. These cost increases are expected to impact uranium
mining operations globally; however, few have completed significant
operating cycles and/or estimates of future costs in the current
cost environment.
Uranium Selling Price Assumptions
The base case
economic analysis assumes uranium sales from Phoenix mine
production will be made from time to time throughout the production
period at the forecasted annual “Composite Midpoint”
uranium spot price from the Q2’2023 Uranium Market Outlook
(‘UMO’) issued by UxC, LLC (‘UxC’), which
is stated annually in constant (non-inflated) 2023 dollars and
ranges from ~US$66 to US$70 per pound U3O8 during the
indicative production period of the Phoenix operation.
This is the same
pricing methodology applied for Phoenix as the base case scenario
in the 2018 PFS, where the “Composite Midpoint” uranium
prices during the indicative years of production then ranged from
only US$29 to US$45 per pound U3O8 in constant 2018
dollars. Consistent with the 2018 PFS, the overall cost profile and
construction timeline of the planned Phoenix ISR mine is not
expected to require substantial contract base loading to justify
development. Accordingly, the spot price indicator from UxC has
been used for the Phoenix base case economic analysis.
Gryphon PFS Update
The mineral
resource estimate for Gryphon remains unchanged from the 2018 PFS.
Using a cut-off grade of 0.2% U3O8, Gryphon is
estimated to contain Indicated mineral resources of 1,643,000
tonnes, at a grade of 1.7% U3O8 for a total of
61.9 million pounds U3O8, plus Inferred
mineral resources of 73,000 tonnes at a grade of 1.2% U3O8 for a total of
1.9 million pounds U3O8. Mineral
resources are stated inclusive of mineral reserves. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability.
The mine
development and production plan for Gryphon remains largely the
same as the 2018 PFS. Access to the deposit is planned to be via a
primary production shaft with a diameter of 6.1 metres, installed
using a blind boring method to a depth of 550 metres below surface.
A ventilation shaft with a diameter of 5.8 metres, is also planned
to be excavated via blind boring to a depth of 550
metres.
Access from the
shaft to the mine workings will be via a single ramp located on the
hanging wall of the deposit. Mining is planned to consist of
conventional underground longhole stoping mining methods and is
expected to primarily utilize a longitudinal retreat approach.
Mined stopes will be backfilled using a combination of rockfill,
cemented rockfill, and hydraulic fill.
Overall, 49.7
million pounds U3O8 over 1,260,000
tonnes grading 1.8% U3O8 are planned to be
extracted from Gryphon over an approximately 6.5-year mine
life.
Consistent with
the 2018 PFS, production from the Gryphon operation is assumed to
be processed at the 22.5% Denison-owned McClean Lake processing
plant, which is located in the northeastern portion of the
Athabasca Basin region. The results from the 2018 PFS indicate that
the Gryphon deposit is amenable to recovery utilizing the existing
flowsheet for the McClean Lake mill with minimal required upgrades
and an estimated recovery rate of 98.2%. Due to the volume of
throughput expected from the Gryphon operation, the McClean Lake
mill will require certain upgrades to process the mine production
from Gryphon.
To facilitate
access to the McClean Lake mill from the Wheeler River site, the
Gryphon Update carries certain costs of building an extension to
Highway 914 to connect the McArthur River and Cigar Lake operations
and to allow for the transport of Gryphon mine production over an
approximately 160 kilometre route.
Due to its
proximity to Phoenix, the Gryphon operation is expected to benefit
from site infrastructure that is planned to be established in
support of the Phoenix ISR mine (e.g., airstrip, camp, access road,
power distribution). Additional site infrastructure for Gryphon is
generally limited to items directly related to the underground
mining operation, including incremental power distribution
requirements, ore and waste rock handling, as well as mine water
handling and treatment.
Capital Costs
Estimated direct
initial capital costs of $487.6 million represent a 48% increase
compared to the 2018 PFS. The increase in direct initial capital
costs reflect recent inflationary trends in labour and materials
costed using the Chemical Engineering Plant Cost Index. Initial
capital costs are expected to be incurred during a 42-month
construction period that will include approximately 24 months for
the completion of the production shaft and vent raise. Surface
facilities, underground excavation, haulage road, and McClean Lake
mill upgrades are expected to take approximately 18 months. Initial
ore recovery occurs prior to the completion of construction and
ramps up for the mine to achieve full production by year
3.
Contingencies
reflect approximately 25% of total capital costs, which is
considered appropriate given the estimate was prepared to meet AACE
Class 4 requirements in alignment with the stage of engineering and
design efforts for the project.
Taken together
with estimated indirect costs, sustaining and decommissioning
capital costs, and the reallocation of certain costs to the pre-FID
period, total life of mine capital costs are estimated at $841.1
million. This represents a 19% increase in life of mine capital
costs compared to the 2018 PFS. Due to construction schedule
optimization, the impact of increased capital costs to the NPV has
been minimized.
Operating Costs
Estimated
operating costs of $17.27 (US$12.75) per pound U3O8 produced have
increased by approximately 14% from the 2018 PFS and remain highly
competitive amongst the lowest-cost uranium mining operations
globally. Operating costs have increased as a result of recent
inflationary trends in labour and materials, partially offset by
favourable updates to certain milling assumptions.
Uranium Selling Price Assumptions
The base case
economic analysis assumes uranium sales from Gryphon mine
production will be made throughout the mine life at a fixed price
of US$75 per pound U3O8, which is based
on the average of the forecasted annual "Composite Midpoint"
long-term uranium price from UxC's Q2'2023 UMO, which is stated in
constant (non-inflated) 2023 dollars, during the indicative
production period of Gryphon, rounded to the nearest US$5 per pound
U3O8. This is the same
pricing methodology applied for Gryphon as the base case scenario
in the 2018 PFS, where the "Composite Midpoint" long-term uranium
price during the indicative years of production averaged ~US$50 per
pound U3O8 in then constant
2018 dollars. Consistent with the 2018 PFS, the overall cost
profile and construction timeline of the planned Gryphon
underground mine is considered to be more amenable to fixed (base
escalated) price contracts with nuclear energy utilities to reduce
risk and justify a development decision. Accordingly, the long-term
price indicator from UxC has been used for the Gryphon base case
economic analysis.
Environmental and Sustainability Activities and Licensing
Activities
Environmental Assessment Activities
In October 2022,
the draft EIS for the Wheeler River Project was submitted to
Provincial and Federal regulators and the formal review process was
initiated. Technical comments and information requests were
received from both regulatory agencies in the first quarter of 2023
and the Company has provided technical responses to both the
Provincial and Federal regulators. Additional rounds of review are
expected to be initiated prior to finalization of the
EIS.
Licensing Activities
The Company
submitted documentation to the Canadian Nuclear Safety Commission
(‘CNSC’) as part of the licensing process required to
obtain a site preparation and construction license for Phoenix. The
process will include the review and acceptance of program and
engineering documents outlining Denison’s plans to safely
design, manage, prepare and construct the proposed ISR mine and
processing facility.
Evaluation Pipeline Properties
Waterbury Lake
In
2020, an independent preliminary economic analysis
(‘PEA’) was completed for the Waterbury Lake Property,
which evaluated the potential use of the ISR mining method at the
THT deposit. Further details regarding Waterbury, including the
estimated mineral resources, are provided in the Technical Report
for the Waterbury project titled ‘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 (‘Waterbury PEA
Technical Report’). A copy of the Waterbury PEA Technical
Report is available on Denison’s website and under its
profile on each of SEDAR+ and EDGAR.
Denison’s
2023 evaluation plans for Waterbury are designed to build upon the
PEA, including an ISR field program that is expected to include the
installation of eight new ISR test wells within the mineralized
zone at THT, the collection of site-specific hydrogeological test
data to verify permeability and containment assumptions, and the
collection of fresh metallurgical drill core samples in order to
support additional de-risking of the ISR mining approach for the
THT deposit.
The ISR field program commenced in the second
quarter of 2023 with the installation of the first ISR test wells
at THT, and is expected to include pump testing, injection testing,
tracer testing, permeameter data, hydrogeological logging, and
geological logging. During the three and six
months ended June 30, 2023, evaluation costs at Waterbury Lake were
$1,537,000 and $1,600,000, respectively (Denison’s share
$1,036,000 and $1,079,000, respectively).
Midwest
The
Midwest Joint Venture (‘MWJV’) 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 67.41% 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.
A
Concept Study for ISR application at Midwest (the ‘Concept
Study’) was prepared by Denison during 2022 and was formally
issued to the MWJV in early 2023 (see Denison press release dated
April 12, 2023). Based on the positive results of the Concept
Study, the MWJV provided Denison with approval to complete
additional ISR-related evaluation work for Midwest in
2023.
Denison’s
2023 evaluation plans for Midwest include an inaugural ISR field
program which has been designed to assess site-specific technical
elements of the Midwest deposit. The field program commenced during
the second quarter of 2023, and the results of the program, along
with further technical studies are expected to be used to further
advance the evaluation of the ISR mining method for the property,
which may include the preparation of a PEA.
During
the three and six months ended June 30, 2023, Denison’s share
of evaluation costs at Midwest was $41,000 and $41,000,
respectively (June 30, 2022 – $nil and $nil). The work plan
for 2023 includes (1) preliminary geological and hydrogeological
modelling to guide field program data collection, (2) relogging of
historical drill core to assess for hydrogeological
characteristics, (3) collection of preliminary rock permeability
values at Midwest, and (4) refined hydrogeological modelling based
on results of field data.
In
addition, metallurgical testing on historic drill core samples is
also planned for 2023. The metallurgical test work is planned to
commence in the third quarter of 2023 and is expected to consist of
bottle roll tests designed to provide initial site-specific, ISR
focused, metallurgical results.
Community Engagement Activities
During the first half of 2023, Denison
continued working with Indigenous communities of interest and
collaborated on engagement activities
in the Athabasca Basin region of northern Saskatchewan, including
community visits to provide information about the Company’s
Wheeler River Project and other exploration and evaluation
activities. To start the field season at THT, the Ya’thi
Néné Lands and Resources Office facilitated an
opening ceremony that occurred prior to the commencement of
drilling activities associated with the 2023 ISR field program.
Several community site visits were also conducted at the Wheeler
River Project FFT site. Denison is also progressing the
preparation of responses to comments from Indigenous and
non-Indigenous communities received in relation to the Wheeler
River EIS.
MINERAL PROPERTY EXPLORATION
During the three
and six months ended June 30, 2023, Denison’s share of
exploration expenditures was $1,834,000 and $5,781,000,
respectively (June 30, 2022 –$1,060,000 and $3,626,000). The
increase in exploration expenditures compared to the prior year was
due to an increase in winter exploration activities.
Exploration
spending in the Athabasca Basin is generally seasonal in nature,
with spending typically higher during the winter exploration season
(January to mid-April) and summer exploration season (June to
mid-October).
The following
table summarizes the 2023 exploration activities which were
completed up to early July 2023. Exploration drilling programs were
conducted at Wheeler River, Moon Lake South, Moon Lake, Johnston
Lake, and at Waterfound, one of the Company’s non-operated
properties. All exploration expenditure information in this
MD&A covers the three and six months ended June 30,
2023.
EXPLORATION ACTIVITIES
|
Property
|
Denison’s ownership
|
Drilling in metres
(m)(1)
|
Other activities
|
Bell
Lake
|
100.00%
|
-
|
Geophysical
Survey
|
Johnston
Lake
|
100.00%
|
2,346 (3
holes)
|
Geophysical
Survey
|
Moon
Lake
|
100.00%
|
627 (1
hole)
|
-
|
Moon Lake
South
|
75.00%
|
3,306 (6
holes)
|
-
|
Waterfound
|
24.68%(2)
|
8,061 (13
holes)
|
-
|
Wheeler
River
|
95.00%(3)
|
3,034 (5
holes)
|
Geophysical
Survey
|
|
|
|
|
Total
|
|
17,374 (28 holes)
|
|
(1)
The Company reports total
exploration metres drilled and the number of holes that were
successfully completed to their target depth.
(2)
Denison’s effective
ownership interest as at June 30, 2023, including an indirect
12.90% ownership interest held through Denison’s 50%
ownership of JCU.
(3)
Denison’s effective
ownership interest as at June 30, 2023, including the indirect 5.0%
ownership interest held through the JCU.
The
Company’s land position in the Athabasca Basin, as of June
30, 2023, is illustrated in the figure below. The Company’s
Athabasca land package decreased during the second quarter of 2023,
from 295,752 hectares (213 claims) to 286,146 hectares (207
claims). The decrease was due to the sale of the South Dufferin
property to Skyharbour Resources Ltd., slightly offset by the
acquisition of three additional claims adjacent to the Darby
property. The land position reported by the Company excludes the
land positions held by JCU.
Wheeler River Exploration
Denison’s
share of exploration costs at Wheeler River during the three and
six months ended June 30, 2023 was $67,000 and $1,295,000,
respectively (June 30, 2022 – $37,000 and
$148,000).
The 2023 Wheeler
River winter exploration drilling program was initiated in
mid-January, and was completed during the first quarter. A total of
3,034 metres was drilled in 5 holes, with three holes drilled
approximately 850 metres south of Gryphon, and an additional two
drill holes completed at the Gryphon South target area,
approximately 2.8 kilometres south of the Gryphon
deposit.
During the second
quarter of 2023, exploration work at Wheeler River included the
analysis and interpretation of the results of the 2023 winter
drilling program and planning for the summer drilling program,
which is expected to commence in September 2023 and is planned to
include 2,500 metres of diamond drilling.
Drilling
During the first
quarter of 2023, three holes were drilled to test the potential to
upgrade the unconformity-associated mineralization found in 2015
drill hole WR-597, located approximately 850 metres south of the
Gryphon deposit (4.5% U3O8 over 4.5 metres),
by testing the unconformity approximately 100 metres southwest
along strike of WR-597. While the 2023 drill holes did not
intersect unconformity-hosted uranium mineralization, multiple
intervals of basement-hosted mineralization were identified:
WR-810A intersected uranium mineralization grading 1.27%
eU3O8 over 1.0 metres
approximately 60 metres below the unconformity; and WR-811A
identified basement-hosted mineralization grading 0.61%
eU3O8 over 4.0 metres,
approximately 4.0 metres below the unconformity.
Also in the first
quarter of 2023, two additional holes were completed at the Gryphon
South target area, designed to test conductivity anomalies
associated with the edges of a resistivity low anomaly, located an
additional 2.8 km along strike to the south of WR-810A and WR-811A.
This basement resistivity low exhibits an S-shaped flexure,
creating a structural setting where zones of both dilation and
compression may be present, which present attractive targets for
both basement-hosted and unconformity-hosted mineralization
respectively.
WR-808 targeted
the SE edge of the resistivity anomaly. A graphitic pelite was
intersected in the upper basement, interpreted to explain the
conductive response. Unfortunately, no significant structural
disruption was associated with this graphitic pelite. Significant
carbonate veining was observed approximately 150 metres below the
unconformity, perhaps indicating that there may be a significant
structure nearby. No significant elevated radioactivity was
encountered in WR-808.
WR-809 targeted
the NW edge of the resistivity anomaly and intersected a graphitic
fault zone approximately 40 metres below the unconformity
consisting of sporadic breccias with structurally upgraded graphite
with thicknesses of up to 20 centimetres. The up-dip projection of
this structure at the unconformity presents a target for future
exploration drilling.
Ground Geophysics
In addition to
the winter diamond drilling activities, the Stepwise Moving Loop
Electromagnetic (‘SWML EM’) survey that was initiated
at the N Zone target area in the fourth quarter of 2022 was
completed in January 2023. The final processed data set was
received in the first quarter of 2023. Analysis and interpretation
is ongoing.
Exploration Pipeline Properties
During the first
half of 2023, five exploration field programs were carried out at
Denison’s pipeline properties (four operated by Denison) and
Denison’s share of exploration costs for these properties was
$1,591,000 and $4,360,000 respectively, for the three and six
months ended June 30, 2023 (June 30, 2022 - $851,000 and
$3,139,000).
The Company
continues to review, prioritize and rationalize its Athabasca Basin
exploration portfolio with the objective of continuing to explore
its highest priority projects, with the potential to deliver
significant and meaningful new discoveries.
Bell Lake
During the first
quarter of 2023, a Small Moving Loop Electromagnetic (‘SML
EM’) survey was completed on the Company’s 100%-owned
Bell Lake property to locate and refine the positions of discrete,
steeply-dipping conductors within a broad resistivity low anomaly
identified from the 2013 and 2015 DC resistivity surveys. The final
processed data set was received during the second quarter. The
results of the survey are currently being evaluated by
Denison’s exploration team and will be used to generate
targets for future exploration drilling programs.
Hook-Carter
Located in the
southwest corner of the Athabasca basin, the Hook-Carter project is
interpreted to host the strike extension of the Patterson Lake
corridor, which hosts NexGen Energy’s Arrow deposit, Fission
Uranium’s Triple R deposit, and Purepoint Uranium
Group’s Spitfire zone. The project also overlies the
interpreted strike extension of the Carter and Derkson corridors,
each of which represent highly prospective, under-explored
corridors in which significant uranium mineralization may
exist.
A property-wide
Z-Axis Tipper Electromagnetic (‘ZTEM’) survey was
completed on the Company’s Hook-Carter property in June of
2023. The primary objective of the ZTEM survey is to develop a
project-scale conductivity model that will provide valuable insight
into the underlying basement geology, which will be used to drive
further exploration activities on the project. A total of 1,559
kilometres of ZTEM data was collected. The final processed data set
is expected to be received during the third quarter of
2023.
Johnston Lake
The Johnston Lake
project is 100% owned and operated by Denison. The property,
located approximately 20 kilometres northwest of Cameco’s
Cigar Lake operation, consists of nine mineral dispositions
totaling 28,647 hectares.
During the first
quarter of 2023, a SML EM survey was completed on the property to
better define basement conductivity associated with the MJ1
conductive trend and generate targets for future drill testing on
the project. The final processed data set was received in the
second quarter. Further integration and interpretation by
Denison’s exploration team is ongoing.
The 2023
exploration drilling program at Johnston Lake commenced in early
June and is expected to be completed in the third quarter. A total
of 6,000 metres is planned to evaluate the MJ-1 trend, where
historic drilling identified significant uranium and base metal
enrichment. As of mid-July 2023, three drill holes were complete
for a total of 2,346 metres. Alteration and structure indicative of
a potentially mineralizing system have been intersected in all
three drill holes.
Moon Lake
The Moon Lake
property is located in the southeastern part of the Athabasca
Basin, adjacent to the western boundary of the Wheeler River
project. During the first quarter of 2023, the Company completed an
exploration drilling program, consisting of one diamond drill hole
drilled to 627 metres depth. No significant structure, alteration,
or uranium mineralization was intersected. No further work is
planned for the property in 2023.
Moon Lake South
The Moon Lake
South property is also located adjacent to the western boundary of
the Wheeler River project and is north of Denison’s 100%
owned Crawford Lake project, approximately 30 kilometres northwest
of Cameco’s Key Lake operation. The Moon Lake South project
is a joint venture between Denison Mines Corp., which holds a 75%
interest in the property, and CanAlaska Uranium Ltd. (‘Moon
Lake South JV’), which holds the remaining 25% interest.
Denison is the project operator.
The
2023 winter exploration program consisted of six completed diamond
drill holes totaling 3,306 metres, designed to evaluate the
potential to expand the footprint of known mineralization
discovered in 2016 and 2021 by testing conductivity anomalies
identified from the 2022 SWML EM survey.
In April 2023,
the Company announced that uranium
mineralization was encountered in four of the six drill holes
completed during the 2023 winter exploration program, highlighted
by MS-23-10A which intersected perched high-grade uranium
mineralization lying approximately 30 metres above the
sub-Athabasca unconformity. Assay results from the 2023 winter
drilling program were received during the second quarter, which
confirmed and upgraded the high-grade result reported from
MS-23-10A, returning 2.46% U3O8
over 8.0 metres (0.05%
U3O8
cut-off), including 3.71%
U3O8
over 4.5 metres (2%
U3O8
cut-off). This represents a
significant increase in the average grade of the mineralized
intersection compared to the previously reported radiometric
equivalent probe grades (1.38% eU3O8
over 8.7 metres (0.05%
eU3O8
cut-off), including a sub-interval
grading 2.88% eU3O8
over 3.1 metres).
The
Moon Lake South JV has approved a supplemental program to drill up
to an additional 4,400 metres to test for additional mineralization
in the vicinity of MS-23-10A. The supplemental drill program is
expected to begin in September 2023.
Waterfound River
Waterfound River
(‘Waterfound’) is operated by Orano Canada. Denison has
an effective 24.68% ownership interest in the project, including an
11.78% direct interest and a 12.90% indirect interest from its 50%
ownership of JCU.
The 2023 winter
diamond drill program was designed with three objectives: (i) to
evaluate and define the extent of high-grade unconformity
associated uranium mineralization around the recently discovered
Crocodile zone (including the broad zone of uranium mineralization
previously encountered in WF-74A, which returned 4.75%
eU3O8 over 13.3 metres,
including a peak interval of 25.23% eU3O8 over 0.5 metres);
(ii) characterize and determine the extent of historical
mineralization at the Alligator showing (includes 4.49%
U3O8 over 10.53
metres); and (iii) test the potential for high-grade mineralization
between the two mineralized zones.
The most
significant mineralization returned from the 2023 winter drill
program was encountered in WF-74A-1, which tested the unconformity
approximately 17 metres south of WF-74A. Mineralization grading
0.53% eU3O8 over 4.6 metres
was encountered straddling the unconformity contact.
The summer drill
program at Waterfound was initiated in mid-June 2023. Two holes
have been completed, with one hole in progress, for a total of
1,743 metres drilled as of mid-July, of which no uranium
mineralization above a cutoff grade of 0.05% eU3O8 has been
identified.
GENERAL AND ADMINISTRATIVE EXPENSES
Total general and
administrative expenses were $3,209,000 and $6,463,000,
respectively during the three and six months ended June 30, 2023
(June 30, 2022 - $2,759,000 and $6,823,000). These costs are mainly
comprised of head office salaries and benefits, office costs in
multiple regions, audit and regulatory costs, legal fees, investor
relations expenses, project costs, and all other costs related to
operating a public company with listings in Canada and the United
States. The increase in general and administrative expenses during
the second quarter of 2023, is primarily driven by an increase in
compliance costs (stock exchange fees, audit fees, etc.), as well
as increased travel costs associated with site visits to the
Wheeler River FFT site. The decrease in general and administrative
expenses in the six months ended June 30, 2023 was predominantly
driven by a decrease in the employee cash bonus expense, slightly
offset by the increase in compliance costs and travel costs
recorded in the second quarter.
OTHER INCOME
During the three
and six months ended June 30, 2023, the Company recognized net
other income of $12,000,000 and $22,246,000, respectively (June 30,
2022 – loss of $7,481,000 and a gain of
$45,164,000).
The main drivers
of other income are as follows:
Fair value gains or losses on uranium investments
During 2021, the
Company acquired 2,500,000 pounds of 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) 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 advancement and/or construction of
Wheeler River. Given that this material is held for long-term
capital appreciation, the Company’s holdings are measured at
fair value, with changes in fair value between reporting dates
recorded through profit and loss. During the three months ended
June 30, 2023, the spot price of U3O8 increased from
$68.54 (US$50.65) per pound U3O8 as at March 31,
2023, to $74.14 (US$56.00) per pound U3O8, at June 30,
2023, resulting in a fair value of the Company’s uranium
investments of $185,357,000 and mark-to-market gains for the three
months ended June 30, 2023 of $13,995,000 on the Company’s
uranium holdings (June 30, 2022 – mark to market loss of
$18,177,000). During the six months ended June 30, 2023, the spot
price of U3O8 increased from
$65.01 (US$48.00) per pound U3O8 as at December
31, 2022, to $74.14 (US$56.00) per pound U3O8, at June 30,
2023, resulting in mark-to-market gains for the six months ended
June 30, 2023 of $22,821,000 on the Company’s uranium
holdings (June 30, 2022 - $29,579,000).
Fair value gains or losses on portfolio investments
During the three
and six months ended June 30, 2023, the Company recognized losses
of $3,051,000 and $1,885,000, respectively, on portfolio
investments carried at fair value (June 30, 2022 – losses of
$9,261,000 and $4,986,000). Gains and losses on investments carried
at fair value are determined by reference to the closing share
price of the related investee at the end of the period, or, as
applicable, immediately prior to disposal.
Fair value gains or losses on warrants on investments
In October 2021,
the Company sold (1) 32,500,000 common shares of GoviEx Uranium
Inc. (‘GoviEx’) and (2) 32,500,000 GoviEx warrants
(‘GoviEx Warrants’) for combined gross proceeds of
$15,600,000. The gross proceeds were allocated to the GoviEx shares
and GoviEx Warrants based on their relative fair values at the time
of sale.
The GoviEx
Warrants entitled the holder to acquire from Denison one common
share of GoviEx owned by Denison for $0.80 during the 18 month life
of the warrant (until April 2023) and were accounted for as a
derivative liability. At each applicable period end, the warrants
were revalued and the revaluation gains and losses are recorded in
other income and expense.
During the three
and six months ended June 30, 2023, the Company recorded a fair
value loss on the GoviEx Warrants of $nil and $nil, respectively
(June 30, 2022 - gain of $2,308,000 and $1,170,000). The warrants
expired unexercised in April 2023 and had already been reduced to a
fair value of $nil at December 31, 2022.
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 entitled
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 were denominated in
US dollars, which differs from the Company’s Canadian dollar
functional currency, and therefore the warrants were 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 applicable period end, the warrants
were revalued, with the revaluation gains or losses recorded in
other income and expense.
During the three
and six months ended June 30, 2023, the Company recorded a fair
value loss of $nil and $nil, respectively, on the revaluation of
the Denison share purchase warrants (June 30, 2022 - gains of
$17,217,000 and $16,733,000). The warrants expired in the first
quarter of 2023 and had already been reduced to a fair value of
$nil at December 31, 2022.
Gain on receipt of proceeds from Uranium Industry a.s
In January 2022,
the Company executed a Repayment Agreement (‘RA’)
pursuant to which the parties negotiated the repayment of the debt
owing from Uranium Industry a.s (‘UI’) to Denison in
connection with the Company’s sale of its mining assets and
operations located in Mongolia to UI in 2015 for upfront cash
consideration as well as the rights to receive additional
contingent consideration. Under the terms of the RA, UI has agreed
to make scheduled payments of the amounts owing from the sale of
the Mongolia operations through a series of quarterly installments
and annual milestone payments, until December 31, 2025. The total
amount due to Denison under the RA, including amounts received to
date in 2022, is approximately US$16,000,000, inclusive of
additional interest to be earned over the term of the agreement at
a rate of 6.5% per annum. The RA 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
RA.
During the three
and six months ended June 30, 2023, the Company received US$200,000
and US$400,000, respectively, from UI (June 30, 2022 - US$100,000
and US$2,200,000), of which a portion relates to reimbursement of
legal and other expenses incurred by Denison. During the three and
six months ended June 30, 2023, as a result of the payments
received, the Company recorded gains related to the Mongolia sale
receivable of $266,000 and $535,000, respectively (June 30, 2022 -
$127,000 and $2,713,000). This receivable is recorded at fair value
at each period end (June 30, 2023 and December 31, 2022 -
$nil).
Foreign exchange losses
During the three
and six months ended June 30, 2023, the Company recognized foreign
exchange losses of $354,000 and $191,000, respectively (June 30,
2022 – gains of $487,000 and $287,000). The foreign exchange
losses in the three and six months ended June 30, 2023 are
predominantly due the impact of the decrease in the US dollar to
Canadian dollar exchange rate during the year on US dollar cash
balances.
EQUITY SHARE OF INCOME FROM JOINT VENTURES
During the three
and six months ended June 30, 2023, the Company recorded its equity
share of loss from JCU of $2,461,000 and $3,355,000, respectively
(June 30, 2022 - $812,000 and $1,304,000). The Company records its
share of income or loss from JCU 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 $46,500,000 at June 30, 2023 (December 31, 2022
– $50,915,000).
The decrease in
cash and cash equivalents of $4,415,000 was predominantly due to
net cash used in operations of $17,212,000 and net cash used in
investing activities of $2,800,000, offset by net cash provided by
financing activities of $15,661,000.
Net cash used in
operating activities of $17,212,000 was predominantly due to net
income for the period, and adjustments for non-cash items,
including fair value adjustments.
Net cash used in
investing activities of $2,800,000 consists primarily of the
Company’s incremental investment in JCU, an increase in
property plant & equipment, as well as an increase in
restricted cash due to the Company’s funding the Elliot Lake
reclamation trust fund.
Net cash provided
by financing activities of $15,661,000 was mainly due to the net
proceeds from the Company’s At-The-Market (‘ATM’)
equity program, as well as stock option exercises. See below for
further details regarding the ATM program.
In September
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.
Also 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 allows 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 the three
and six months ended June 30, 2023, the Company issued 8,481,060
shares under the 2021 ATM Program. The common shares were issued at
an average price of $1.85 per share for aggregate gross proceeds of
$15,653,000. The Company also recognized commission-related and
other issue costs of $314,000 related to its ATM share issuances.
Since launching the 2021 ATM Program, the Company has issued
23,364,222 shares under the 2021 ATM Program at an average price of
$1.88 per share for aggregate gross proceeds of
$43,828,000.
Also during the
six months ended June 30, 2023, the Company received share issue
proceeds of $452,000 related to the issuance of 666,714 shares upon
the exercise of employee stock options.
Use of Proceeds
March 2021 Unit Financing
As disclosed in
the Company’s prospectus supplement to its 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 2021, the Company acquired
2,500,000 pounds of U3O8 with a total cost
of $89,196,000. The remainder of the net proceeds of this financing
will be utilized for general, corporate, and administrative
expenses, in line with the use of proceeds disclosed in the March
2021 Prospectus Supplement.
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 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, subject to the actual amount raised.
During the period from the closing of the financing in September
2021 to June 30, 2023, 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 December 22,
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, 2024 (‘2023
Credit Facility’). Under the 2023 Credit Facility, the
Company increased the facility by $992,000 to cover additional
standby letters of credit with respect to environmental obligations
related to the FFT activities at Wheeler River. The Company now has
access to letters of credit of up to $23,964,000, which is fully
utilized for non-financial letters of credit in support of
reclamation obligations. All other terms of the 2023 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 $7,972,000 in
cash collateral on deposit with BNS to maintain the current letters
of credit issued under the 2023 Credit Facility.
TRANSACTIONS WITH RELATED PARTIES
Korea Electric Power Corporation (‘KEPCO’)
Denison and Korea
Hydro Nuclear Power Canada (‘KHNP Canada’) (which is an
indirect subsidiary of KEPCO through Korea Hydro Nuclear Power
(‘KHNP’)) are parties to the KHNP Strategic
Relationship Agreement, which provides for a long-term
collaborative business relationship between the parties and
includes a right of KHNP Canada to nominate one representative to
Denison’s Board of Directors provided that its shareholding
percentage is at least 5%.
KHNP Canada is
also the majority member of KWULP. KWULP is a consortium of
investors that holds the non-Denison owned interests in Waterbury
Lake Uranium Corporation and Waterbury Lake Uranium Limited
Partnership (‘WLULP’), entities whose key asset is the
Waterbury Lake property.
COMPENSATION OF KEY MANAGEMENT PERSONNEL
Key management
personnel are those persons having authority and responsibility for
planning, directing and controlling the activities of the Company,
directly or indirectly. Key management personnel include the
Company’s executive officers, vice-presidents and members of
its Board of Directors.
The following
compensation was awarded to key management personnel:
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
(in
thousands)
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Salaries and
short-term employee benefits
|
$
|
(546)
|
$
|
(545)
|
$
|
(1,644)
|
$
|
(2,168)
|
Share-based
compensation
|
|
(659)
|
|
(825)
|
|
(1,473)
|
|
(1,648)
|
|
$
|
(1,205)
|
$
|
(1,370)
|
$
|
(3,117)
|
$
|
(3,816)
|
The decrease in
salaries and short-term employee benefits awarded to key management
in the six months ended June 30, 2023 is predominantly driven by a
decrease in bonus expense. During 2022, key management compensation
included a special additional bonus award granted to certain key
management personnel.
OFF-BALANCE SHEET ARRANGEMENTS
The Company does
not have any off-balance sheet arrangements.
OUTSTANDING SHARE DATA
Common Shares
At August 9,
2023, there were 835,875,854 common shares issued and outstanding
and a total of 854,113,858 common shares on a fully-diluted
basis.
Stock Options and Share Units
At August 9,
2023, there were 9,289,500 stock options, and 8,948,504 share units
outstanding.
OUTLOOK FOR 2023
During the second
quarter of 2023, the Company increased its outlook for exploration
expenditures by $784,000 predominantly due to the expanded drilling
program for Moon Lake South (see above for further details). The
remainder of the Company’s plans for the year remain
unchanged. Refer to the Company’s annual MD&A for the
year ended December 31, 2022 for a detailed discussion of the
previously disclosed 2023 budget.
(in
thousands)
|
|
2023 BUDGET
|
2023 OUTLOOK
|
Actual to
June 30, 2023(2)
|
Mining Segment
|
|
|
|
|
Development &
Operations
|
|
(1,695)
|
(1,695)
|
(704)
|
Exploration
|
|
(7,964)
|
(8,748)
|
(5,668)
|
Evaluation
|
|
(27,260)
|
(27,260)
|
(8,710)
|
JCU Cash
Contributions
|
|
(3,146)
|
(3,146)
|
(1,100)
|
|
|
(40,065)
|
(40,849)
|
(16,182)
|
Closed Mines Segment
|
|
|
|
|
Closed Mines
Environmental Services
|
|
873
|
873
|
551
|
|
|
873
|
873
|
551
|
Corporate and Other Segment
|
|
|
|
|
Corporate
Administration & Other
|
|
(4,476)
|
(4,476)
|
(3,827)
|
|
|
(4,476)
|
(4,476)
|
(3,827)
|
Total(1)
|
|
$ (43,668)
|
$ (44,452)
|
$ (19,458)
|
Notes:
1.
Only material operations
shown.
2.
The budget is prepared on a
cash basis. As a result,
actual amounts represent a non-GAAP measure. Compared to segment
loss as presented in the Company’s unaudited interim
consolidated financial statements for the six months ended June 30,
2023, actual amounts reported above includes capital additions of
$1,283,000, $535,000 in repayments from UI, and excludes $1,910,000
net impact of non-cash items and other adjustments.
QUALIFIED PERSON
Chad Sorba,
P.Geo., Denison’s Director Technical Services, 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.sedarplus.com)
and EDGAR (www.sec.gov/edgar.shtml):
●
For the Wheeler River
project, the ‘Technical Report for the Wheeler River project
titled ‘NI 43-101 Technical Report on the Wheeler River
Project, Athabasca Basin, Saskatchewan, Canada’ with an
effective date of June 23, 2023;
●
For the Waterbury Lake
project, ‘Preliminary Economic Assessment for the Tthe
Heldeth Túé (J Zone) Deposit, Waterbury Lake Property,
Northern Saskatchewan, Canada’ with an effective date of
October 30, 2020;
●
For the Midwest project,
‘Technical Report with an Updated Mineral Resource Estimate
for the Midwest Property, Northern Saskatchewan, Canada’
dated March 26, 2018; and
●
For the McClean Lake project,
(A) the ‘Technical Report on the Denison Mines Inc. Uranium
Properties, Saskatchewan, Canada’ dated November 21, 2005, as
revised February 16, 2006, (B) the ‘Technical Report on the
Sue D Uranium Deposit Mineral Resource Estimate, Saskatchewan,
Canada’ dated March 31, 2006, and (C) the ‘Technical
Report on the Mineral Resource Estimate for the McClean North
Uranium Deposits, Saskatchewan’ dated January 31,
2007.
ASSAY PROCEDURES AND DATA VERIFICATION
The Company
reports preliminary radiometric equivalent grades
(‘eU3O8’), derived
from a calibrated down-hole total gamma probe, during or upon
completion of its exploration programs and subsequently reports
definitive U3O8 assay grades
following sampling and chemical analysis of the mineralized drill
core. Uranium assays are performed on split core samples by the
Saskatchewan Research Council (‘SRC’) Geoanalytical
Laboratories using an ISO/IEC 17025:2005 accredited method for the
determination of U3O8 weight %. Sample
preparation involves crushing and pulverizing core samples to 90%
passing -106 microns. The resultant pulp is digested using
aqua-regia and the solution analyzed for U3O8 weight % using
ICP-OES. Geochemical results from composite core samples are
reported as parts per million (‘ppm’) obtained from a
partial HNO3:HCl digest with
an ICP-MS finish. Boron values are obtained through NaO2/NaCO3 fusion followed
by an ICP-OES finish. All data are subject to verification
procedures by qualified persons employed by Denison prior to
disclosure. For further details on Denison’s sampling,
analysis, quality assurance program and quality control measures
and data verification procedures please see Denison's Annual
Information Form dated March 27, 2023 available on the
Company’s website and filed under the Company's profile on
SEDAR+ (www.sedarplus.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: the results of, and estimates and assumptions
within, the Phoenix FS and the Gryphon PFS Update, including the
estimates of Denison's mineral reserves and mineral resources, and
statements regarding anticipated budgets, fees, expenditures and
timelines; Denison’s plans and objectives for 2023 and
beyond; exploration, development and expansion plans and
objectives, including Denison’s planned engineering,
environmental assessment and other evaluation programs; statements
regarding Denison’s EA plans and objectives; expectations
regarding Denison’s community engagement activities and
related agreements; expectations regarding Denison’s joint
venture ownership interests and the continuity of its agreements
with its partners; expectations regarding the toll milling of Cigar
Lake ores, including projected annual production volumes;
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 Phoenix FS,
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 regulatory or public health
restrictions or requirements.
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 27, 2023 under the heading ‘Risk Factors’. These
factors are not, and should not be construed as being
exhaustive.
Accordingly,
readers should not place undue reliance on forward-looking
statements. The forward-looking information contained in this
MD&A is expressly qualified by this cautionary statement. Any
forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this MD&A. Denison does
not undertake any obligation to publicly update or revise any
forward-looking information after the date of this MD&A to
conform such information to actual results or to changes in
Denison's expectations except as otherwise required by applicable
legislation.
Cautionary Note to United States Investors
Concerning Estimates of Measured, Indicated and Inferred Mineral
Resources and Proven and Probable Mineral Reserves: This
MD&A may use the terms ‘measured'’,
‘indicated’ and ‘inferred’ mineral
resources. United States investors are advised that while such
terms have been prepared in accordance with the definition
standards on mineral reserves of the Canadian Institute of Mining,
Metallurgy and Petroleum referred to in Canadian National
Instrument 43-101 Mineral Disclosure Standards (‘NI
43-101’) and are recognized and required by Canadian
regulations. Effective February 2019, the United States Securities
and Exchange Commission (‘SEC’) adopted amendments to
its disclosure rules to modernize the mineral property disclosure
requirements for issuers whose securities are registered with the
SEC under the Exchange Act and as a result, the SEC now recognizes
estimates of “measured mineral resources”,
“indicated mineral resources” and “inferred
mineral resources”. In addition, the SEC has amended its
definitions of “proven mineral reserves” and
“probable mineral reserves” to be “substantially
similar” to the corresponding definitions under the CIM
Standards, as required under NI 43-101. However, information
regarding mineral resources or mineral reserves in Denison’s
disclosure may not be comparable to similar information made public
by United States companies.
United States
investors are also cautioned that while the SEC now recognizes
‘indicated mineral resources’ and ‘inferred
mineral resources’, United
States investors are cautioned not to assume that all or any part
of measured or indicated mineral resources will ever be converted
into mineral reserves. United States investors are also cautioned
not to assume that all or any part of an inferred mineral resource
exists, or is economically or legally
mineable.
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I,
David D. Cates, President and Chief Executive Officer of Denison
Mines Corp., certify the following:
1.
Review: I have
reviewed the interim financial report and interim MD&A
(together, the "interim filings") of Denison Mines Corp. (the
"issuer") for the interim period ended June 30, 2023.
2.
No
misrepresentations: Based on my knowledge, having exercised
reasonable diligence, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made,
with respect to the period covered by the interim
filings.
3.
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the
interim financial report together with the other financial
information included in the interim filings fairly present in all
material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility: The
issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual
and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer's other certifying officer(s) and I have, as at the end of
the period covered by the interim filings
(a)
designed DC&P, or caused
it to be designed under our supervision, to provide reasonable
assurance that
(i)
material information relating
to the issuer is made known to us by others, particularly during
the period in which the interim filings are being prepared;
and
(ii)
information required to be
disclosed by the issuer in its annual filings, interim filings or
other reports filed or submitted by it under securities legislation
is recorded, processed, summarized and reported within the time
periods specified in securities legislation; and
(b)
designed ICFR, or caused it
to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with the issuer's GAAP.
5.1
Control framework:
The control framework the issuer's other certifying officer(s) and
I used to design the issuer's ICFR is Internal Control – Integrated
Framework (COSO Framework) published by The Committee of
Sponsoring Organizations of the Treadway Commission
(COSO).
5.2
ICFR: Not
applicable.
5.3
Limitation on scope of
design: Not applicable.
6.
Reporting changes in ICFR: The issuer
has disclosed in its interim MD&A any change in the issuer's
ICFR that occurred during the period beginning on April 1, 2023 and
ended on June 30, 2023 that has materially affected, or is
reasonably likely to materially affect, the issuer's
ICFR.
Date:
August 9, 2023
(signed)
"David Cates"
Title:
President and
Chief Executive Officer
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I,
Gabriel (Mac) McDonald, Executive Vice President and Chief
Financial Officer of Denison Mines Corp., certify the
following:
1.
Review: I have
reviewed the interim financial report and interim MD&A
(together, the "interim filings") of Denison Mines Corp. (the
"issuer") for the interim period ended June 30, 2023.
2.
No
misrepresentations: Based on my knowledge, having exercised
reasonable diligence, the interim filings do not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated or that is necessary to make a statement not
misleading in light of the circumstances under which it was made,
with respect to the period covered by the interim
filings.
3.
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the
interim financial report together with the other financial
information included in the interim filings fairly present in all
material respects the financial condition, financial performance
and cash flows of the issuer, as of the date of and for the periods
presented in the interim filings.
4.
Responsibility: The
issuer's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures
(DC&P) and internal control over financial reporting (ICFR), as
those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual
and Interim Filings, for the issuer.
5.
Design: Subject to
the limitations, if any, described in paragraphs 5.2 and 5.3, the
issuer's other certifying officer(s) and I have, as at the end of
the period covered by the interim filings
(a)
designed DC&P, or caused
it to be designed under our supervision, to provide reasonable
assurance that
(i)
material information relating
to the issuer is made known to us by others, particularly during
the period in which the interim filings are being prepared;
and
(ii)
information required to be
disclosed by the issuer in its annual filings, interim filings or
other reports filed or submitted by it under securities legislation
is recorded, processed, summarized and reported within the time
periods specified in securities legislation; and
(b)
designed ICFR, or caused it
to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with the issuer's GAAP.
5.1
Control framework:
The control framework the issuer's other certifying officer(s) and
I used to design the issuer's ICFR is Internal Control – Integrated
Framework (COSO Framework) published by The Committee of
Sponsoring Organizations of the Treadway Commission
(COSO).
5.2
ICFR: Not
applicable.
5.3
Limitation on scope of
design: Not applicable.
6.
Reporting changes in ICFR: The issuer
has disclosed in its interim MD&A any change in the issuer's
ICFR that occurred during the period beginning on April 1, 2023 and
ended on June 30, 2023 that has materially affected, or is
reasonably likely to materially affect, the issuer's
ICFR.
Date:
August 9, 2023
(signed)
"Gabriel McDonald"
Name:
Gabriel (Mac)
McDonald
Title:
Executive
Vice President and Chief Financial Officer
Exhibit 99.5
|
Denison Mines
Corp.
1100 – 40
University Ave
Toronto, ON M5J
1T1
www.denisonmines.com
|
PRESS
RELEASE
Denison Reports Financial and Operational Results for Q2
2023
Toronto, ON – August 10,
2023. Denison Mines Corp. (‘Denison’ or the
‘Company’) (TSX: DML, NYSE American: DNN) has filed its
Condensed Consolidated Financial Statements and Management’s
Discussion & Analysis (‘MD&A’) for the quarter
ended June 30, 2023. Both documents are or will be available on the
Company’s website at www.denisonmines.com,
SEDAR+ (at www.sedarplus.ca)
and EDGAR (at www.sec.gov/edgar.shtml).
The highlights provided below are derived from these documents and
should be read in conjunction with them. All amounts in this
release are in Canadian dollars unless otherwise
stated.
David Cates, President and CEO of Denison
commented, “During
the second quarter, Denison achieved a further notable milestone
associated with the advancement of our flagship Wheeler River
Project (‘Wheeler River’) with the completion of (i) a
highly successful Feasibility Study (‘Phoenix FS’)
evaluating the use of In-Situ-Recovery (‘ISR’) mining
for the high grade Phoenix uranium deposit (‘Phoenix’),
and (ii) a positive cost update (‘Gryphon Update’) to
the Pre-Feasibility Study (‘PFS’) for the underground
mine planned for the Gryphon uranium deposit
(‘Gryphon’).
As outlined in the Phoenix FS, Denison has successfully completed
several years of technical de-risking, which has cemented
Phoenix’s position as one of the lowest-cost uranium
development projects in the world. Notably, the economics of
Phoenix as an ISR mining operation remain exceptionally robust,
despite industry-wide cost inflation, while most contemporary
uranium development projects have not yet been tested against
current cost inflation. The recent results of the Phoenix FS and
Gryphon Update illustrate Denison’s unique potential to
become a meaningful uranium producer with multiple low-cost
development assets.
Global support for
the role of nuclear power in the clean energy transition continues
to grow and uranium buyers are increasingly prioritizing
geopolitical stability. Denison is well funded, with over $235
million in working capital and investments at the end of the second
quarter, and focused on advancing Phoenix to a final investment
decision in anticipation of building a much-needed new source of
Canadian uranium production.”
Highlights
■
Feasibility Study for Wheeler River Phoenix deposit yields
significant increase in economic results
In June 2023,
Denison released the results of the Phoenix FS completed for ISR
mining of Phoenix. The Phoenix FS demonstrates robust economics
including:
●
Base case pre-tax NPV (8%) of $2.34 billion (100%
ownership-basis) representing a 150% increase in the base case
pre-tax NPV8%
for Phoenix from the 2018
Pre-Feasibility Study (‘2018 PFS’).
●
Very robust
base case pre-tax Internal Rate of Return (‘IRR’) of
105.9%.
●
Adjusted base case after-tax
NPV8%
of $1.56 billion (100% basis) and IRR
of 90.0% – with Denison’s effective 95% interest in the
project equating to an adjusted base case after-tax
NPV8%
of $1.48 billion.
●
Base case
pre-tax and after-tax (adjusted) payback period of 10 months
– equating to a reduction of 11 months for the pre-tax
payback period from the 2018 PFS.
●
Optimized
production profile, based on ISR mine planning efforts evaluating
production potential for individual well patterns – resulting
in an increase to the planned rate of production by approximately
43% during the first five years of operations.
●
Estimated
pre-production capital costs of under $420 million (100% basis),
yielding an impressive base case after-tax (adjusted) NPV to
initial capital cost ratio in excess of 3.7 to 1.
●
Robust
economics that easily absorb cost-inflation and design changes
impacting both operating and capital costs, confirming
Phoenix’s position with estimated cash operating and all-in
costs expected to be amongst the lowest-cost uranium mines in the
world.
●
Phoenix FS
plans aligned and costed to meet or exceed environmental criteria
expected to be required by the ongoing regulatory approval
process.
●
Updated mineral resource estimate, reflecting the
results of 70 drill holes completed in support of ISR de-risking
and resource delineation activities, which has upgraded 30.9
million pounds U3O8
into measured mineral resources, and
increased the average grade of the Zone A high-grade domain. This
zone is now estimated to contain 56.3 million pounds
U3O8
in Measured and Indicated mineral
resources at an average grade of 46.0% U3O8.
●
Upgraded 3.4 million pounds U3O8
into Proven mineral reserves,
representing the equivalent of 85% of production planned during the
first calendar year of operations.
■
Completion of Phoenix ISR De-Risking and Transition to Engineering
Design
The Phoenix
FS reflects independent third-party validation of the selection of
the ISR mining method for Phoenix and builds on the findings from a
comprehensive and rigorous multi-year technical de-risking process
highlighted by the highly successful completion of the leaching and
neutralization phases of the Phoenix Feasibility Field Test
(‘FFT’) in late 2022. Through the technical de-risking
process, Denison has acquired extensive deposit-specific data and
developed a robust ISR mine planning model that involved evaluation
of the production potential for individual well
patterns.
With
technical de-risking of the project substantially complete,
front-end engineering design efforts to support the advancement of
the planned Phoenix operation are already significantly progressed
and the Company is on track to transition into detailed design
efforts, consistent with the Company's Outlook for 2023, before the
end of the year.
■
Cost update to the 2018 PFS for Wheeler River Gryphon deposit
confirms the project remains to be positioned amongst the
lowest-cost uranium mines in the world
The scope of
the Gryphon Update was targeted at the review and update of capital
and operating costs. Mining and processing plans remain largely
unchanged from the 2018 PFS aside from minor scheduling and
construction sequencing optimizations. The key points
include:
●
Base case pre-tax NPV (8%) of $1.43 billion (100%
basis) is a 148% increase in the base case pre-tax
NPV8%
for Gryphon from the 2018
PFS.
●
Strong base
case pre-tax IRR of 41.4%.
●
Base case after-tax NPV8%
of $864.2 million (100% basis) and IRR
of 37.6% – with Denison’s effective 95% interest in the
project equating to a base case after-tax NPV8%
of $821.0 million.
●
Base case
pre-tax payback period of 20 months, and base case after-tax
payback period of 22 months – equating to a reduction of 17
months for the pre-tax payback period from the 2018
PFS.
Importantly,
Gryphon remains a highly valuable project that provides Denison
with an additional source of low-cost potential production to
deploy significant free cash flows expected from
Phoenix.
About Denison
Denison Mines
Corp. was formed under the laws of Ontario and is a reporting
issuer in all Canadian provinces and territories. Denison’s
common shares are listed on the Toronto Stock Exchange (the
‘TSX’) under the symbol ‘DML’ and on the
NYSE American exchange under the symbol
‘DNN’.
Denison is a
uranium exploration and development company with interests focused
in the Athabasca Basin region of northern Saskatchewan, Canada. The
Company has an effective 95% interest in its flagship Wheeler River
Uranium Project, which is the largest undeveloped uranium project
in the infrastructure rich eastern portion of the Athabasca Basin
region of northern Saskatchewan. In mid-2023, a Feasibility Study
was completed for Wheeler River’s Phoenix deposit as an ISR
mining operation, and an update to the previously prepared PFS was
completed for Wheeler River’s Gryphon deposit as a
conventional underground mining operation. Based on the respective
studies, both deposits have the potential to be competitive with
the lowest cost uranium mining operations in the world. Permitting
efforts for the planned Phoenix ISR operation commenced in 2019 and
have advanced significantly, with licensing in progress and a draft
Environmental Impact Statement (‘EIS’) submitted for
regulator and public review October 2022.
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, plus a 25.17% interest in the
Midwest Main and Midwest A deposits and a 67.41% 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 Japan (Canada) Exploration Company, Ltd
(‘JCU’), Denison holds additional interests in various
uranium project joint ventures in Canada, including the Millennium
project (JCU, 30.099%), the Kiggavik project (JCU, 33.8118%) and
Christie Lake (JCU, 34.4508%).
Denison’s
exploration portfolio includes further interests in properties
covering approximately 285,000 hectares in the Athabasca Basin
region.
Denison is also
engaged in post-closure mine care and maintenance services through
its Closed Mines group, which manages Denison’s reclaimed
mine sites in the Elliot Lake region and provides related services
to third party projects.
Technical Disclosure and Qualified Person
The technical
information contained in this press release has been reviewed and
approved by Chad Sorba, P.Geo., Denison’s Director, Technical
Services, and Andy Yackulic, P.Geo., Denison’s Director,
Exploration, who are both Qualified Persons in accordance with the
requirements of NI 43-101.
Further details
of the Phoenix FS and Gryphon Update are provided in
Denison’s press release of June 26, 2023. The results of the
Phoenix FS and Gryphon Update are also detailed in a technical
report entitled “NI 43-101 Technical Report on the Wheeler
River Project Athabasca Basin, Saskatchewan, Canada,” with an
effective date of June 23, 2023 and dated August 8, 2023.
The technical report is or will be
available on the Company’s website at www.denisonmines.com,
on SEDAR+ (at www.sedarplus.ca)
and on EDGAR (at www.sec.gov/edgar.shtml).
For more information, please contact
David Cates
|
(416) 979-1991 ext.
362
|
President and Chief Executive
Officer
|
|
|
|
Mac McDonald
|
(416) 979-1991 ext.
242
|
Exec. Vice President &
Chief Financial Officer
|
|
|
|
Follow Denison on
Twitter
|
@DenisonMinesCo
|
Non-GAAP Financial Measures
This release
includes certain terms or performance measures commonly used in the
mining industry that are not defined under International Financial
Reporting Standards (“IFRS”). Such non-GAAP performance
measures, including NPV, are included because the Company
understands that investors use this information to determine the
Company’s ability to generate earnings and cash flows. The
Company believes that conventional measures of performance prepared
in accordance with IFRS do not fully illustrate the ability of
mines to generate cash flows. Non-GAAP financial measures should
not be considered in isolation as a substitute for measures of
performance prepared in accordance with IFRS and are not
necessarily indicative of operating costs, operating profit or cash
flows presented under IFRS.
Cautionary Statement Regarding Forward-Looking
Statements
Certain
information contained in this press release constitutes
‘forward-looking information’, within the meaning of
the applicable United States and Canadian legislation concerning
the business, operations and financial performance and condition of
Denison.
Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as ‘plans’,
‘expects’, ‘budget’,
‘scheduled’, ‘estimates’,
‘forecasts’, ‘intends’,
‘anticipates’, or ‘believes’, or the
negatives and/or variations of such words and phrases, or state
that certain actions, events or results ‘may’,
‘could’, ‘would’, ‘might’ or
‘will be taken’, ‘occur’, ‘be
achieved’ or ‘has the potential to’.
In particular,
this press release contains forward-looking information pertaining
to the following: projections with respect to exploration,
development and expansion plans and objectives, including the
results of the FS and the scope, objectives and interpretations of
the technical de-risking process for the proposed ISR operation for
the Phoenix deposit, including the FFT, and the interpretation of
the results therefrom; expectations with respect to future
evaluation and development of Phoenix, including front-end
engineering design and detailed design efforts; expectations
regarding regulatory applications and approvals and the elements
thereof, including the EIS; expectations regarding the performance
of the uranium market and global sentiment regarding nuclear
energy; expectations regarding Denison’s joint venture
ownership interests; and expectations regarding the continuity of
its agreements with third parties. Statements relating to
‘mineral reserves’ or ‘mineral resources’
are deemed to be forward-looking information, as they involve the
implied assessment, based on certain estimates and assumptions that
the mineral reserves and mineral resources described can be
profitably produced in the future.
Forward looking
statements are based on the opinions and estimates of management as
of the date such statements are made, and they are subject to known
and unknown risks, uncertainties and other factors that may cause
the actual results, level of activity, performance or achievements
of Denison to be materially different from those expressed or
implied by such forward-looking statements.
For example, the
results and underlying assumptions and interpretations of the FS as
well as de-risking efforts such as the ISR field programs discussed
herein may not be maintained after further testing or be
representative of actual conditions within the applicable deposits.
In addition, Denison may decide or otherwise be required to extend
its evaluation activities and/or discontinue testing, evaluation
and development work if it is unable to maintain or otherwise
secure the necessary approvals or resources (such as testing
facilities, capital funding, etc.). Denison believes that the
expectations reflected in this forward-looking information are
reasonable, but no assurance can be given that these expectations
will prove to be accurate and results may differ materially from
those anticipated in this forward-looking information. For a
discussion in respect of risks and other factors that could
influence forward-looking events, please refer to the factors
discussed in the Company’s Annual Information Form dated
March 27, 2023 under the heading ‘Risk Factors’. These
factors are not, and should not be, construed as being
exhaustive.
Accordingly,
readers should not place undue reliance on forward-looking
statements. The forward-looking information contained in this press
release is expressly qualified by this cautionary statement. Any
forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this press release. Denison
does not undertake any obligation to publicly update or revise any
forward-looking information after the date of this press release to
conform such information to actual results or to changes in
Denison's expectations except as otherwise required by applicable
legislation.
Grafico Azioni Denison Mines (AMEX:DNN)
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Grafico Azioni Denison Mines (AMEX:DNN)
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