Denison Mines Corp. · TSX:DML
Denison Mines — Investor Presentation (September 2005)
46 slides from Denison Mines's investor presentation, September 2005
Slide 1: E. Peter Farmer, President & CEO, September 2005
1 E. Peter Farmer President & CEO September, 2005
Slide 2: Forward Looking Statements
2 Forward Looking Statements Any statements in this presentation that may be considered forward looking are based on current expectations that involve a number of risks and uncertainties, which could cause actual results to differ from those anticipated.
Slide 3: Corporate Overview
3 Corporate Overview 25,367,407 shares o/s (July 31) Market Cap: ~$450 M TSX: DEN Operating Divisions • Uranium exploration, development & production • Environmental services Manager, Uranium Participation Corp. 2005 Exploration Budget: $3.5 million Debt outstanding: nil
Slide 4: Investment Highlights
4 Investment Highlights Pure uranium play The third largest producer in the Athabasca basin 22.5% interest in one of the six largest uranium facilities in the world that is capable of further expansion Attractive, high potential exploration properties in close proximity to the mill Uranium
Slide 5: Uranium Market
5 Uranium Market Decade-long low uranium prices & dearth of exploration has resulted in long-term shortage • Primary mine production = 55% of demand Currently – very tight supply/demand with rising prices
Slide 6: Supply/Demand for Uranium
6 Supply/Demand for Uranium 200M 30M+ 30M+ lbs lbs 150M Gap Gap Secondary Production (pounds) 100M Primary Primary Mine Mine 50M Production Production DEMAND SUPPLY
Slide 7: Supply/Demand Gap
7 Supply/Demand Gap Gap filled by about 100M pound inventories Gap growing by at least 2M pounds/year Electrical use increasing by 2.5%/year Coal & oil fired electrical power converting to nuclear 29 new reactors – China, India, South Korea, Japan & Russia Nuclear now competitive Nucle
Slide 8: Gap Reduction
8 Gap Reduction Cigar Lake production starts in 2007 • 18M pounds/year Smaller, new operations – Kazakhstan, the U.S. & Namibia Increased production – McArthur River, Olympic Dam & Smith Ranch More production required to balance supply & demand At least 10 years required to a develop new m
Slide 9: Spot Market for Uranium
9 Spot Market for Uranium $30 $25 (US$/lb.) $20 $15 U3O8 Spot Prices $10 $5 2000 2001 2002 2003 2004 2005
Slide 10: U3O8 in the Cost of Electricity
10 U3O8 In the Cost of Electricity Fuel 11% 3.5% U3O8 O&M 32% 5.1% Conversion and Enrichment 2.4% Fuel Fabrication Capital 57% • Doubling of the total fuel cost would add 11% to the cost of electricity in a new Nuclear Power Plant. Based on cost of nuclear plant built today. • Doubling of the cost o
Slide 11: Power Industry Production Costs
11 Power Industry Production Costs Fuel as a Percentage of Electric Power Industry Production Costs (2003) 100% 25% 80% 60% 75% 90% 87% 40% 75% 20% 25% 10% 13% 0% Nuclear Coal Gas Oil O&M Fuel Source: RDI Updated 10/04
Slide 12: Levelized Cost of Electricity (US$)
12 Levelized Cost of Electricity (US$) (US$ per megawatt hour) COAL $33 $41 GAS (US$ 3.39- 4.50 / mcf) $35 $45 GAS (US$5.00- 6.75 / MCF) $47 $61 NUCLEAR $31 $46 Source: Notes: The Economic Future of Nuclear Power 1. Includes capital, O&M costs, fuel A Study Conducted by The University of Chicago and
Slide 13: McClean Lake Expansion
13 McClean Lake Expansion
Slide 14: JEB Tailings Facility
14 JEB Tailings Facility
Slide 15: Annual Doses at McClean
15 Annual Doses at McClean 25 Regulatory Annual Dose Limit = 20 mSv Annual Effective Dose (mSv) 20 15 Maximum Average 11 10 6.1 5 2.7 0.9 0 Original EIS Target 2004 Actual Year
Slide 16: McClean Mill Effluent Performance
16 McClean Mill Effluent Performance JEB WTP JEB WTP Quarterly Quaterly Liquid Liquid Effluent Effluent Concentration Concentration 0.80 Discharge Limit (0.75 mg/l) Discharge Limit (0.75 mg/l) Discharge Limit (0.74 Bq/l) 0.70 0.60 0.50 mg/l or Bq/l Action Level (0.40 mg/l) Action Level (0.40 mg/l) 0
Slide 17: McClean Mill Production Profile
17 McClean Mill Production Profile 14 Does not include: 12 Caribou, Millions of lbs of U308 Sue D, or 10 further discoveries 8 Cigar Lake Phase 1 6 4 Other McClean 2 Ore Stockpiles Ores 0 Midwest Ores 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 1 2 2 2 2 2 2 2 2 2 2 2 2 2
Slide 18: Denison's Uranium Reserves
18 Denison’s Uranium Reserves Ore Grade U3O8 (000 tonnes) (% U3O8) (Million lbs.) RESERVES Ore Stockpile 60 1.39 1.9 Sue A, B & E 111 0.79 1.9 McClean North 8 5.54 1.0 Midwest 87 5.47 10.5 Total Reserves: 266 2.60 15.3
Slide 19: Denison's Other Reserves
19 Denison’s Other Reserves Midwest also contains Nickel and Cobalt reserves. Denison’s share of the ore contains 8.38 million pounds of Ni and .65 million pounds of Co at grades of 4.37% and .34% respectively Investigation of Ni & Co production underway
Slide 20: COGEMA – Our Partner
20 COGEMA – Our Partner World leader in all aspects of nuclear fuel cycle Sales of € 8 billion & presence in 30 countries Controlled by Government of France Participates in five of world’s 10 largest uranium mines Accounts for nearly 15% of world uranium production: Canada, Niger, Kazakhst
Slide 21: Denison Mission
21 Denison Mission Expand core business • Supply of U3O8 for clean electrical power • Help to reduce green-house gas emission Increase exploration for new reserves on existing properties Develop existing reserves in socially, environmentally & economically responsible way Acquire new explora
Slide 22: 2005 Objectives
22 2005 Objectives 1. Conserve inventory by reducing sales • 17% reduction will result in >10% reduction in U3O8 revenue • Double uranium earnings 2. Expand uranium reserves • $3M budgeted for 2005 exploration 3. Complete evaluation of blind boring/jet boring at McClean Lake • Testing commenced Augu
Slide 23: 2005 Sales Expectations
23 2005 Sales Expectations Sales volume objective is a reduction of 17% from 2004 Sales expected be apportioned by quarter as follows: Q1- 8%, Q 2- 30%, Q 3- 23%, Q 4- 39% Approximately 22% of expected 2005 volumes are expected to be sold at or near market prices
Slide 24: Financial Highlights
24 Financial Highlights Q2 6 Mo Year 2005 2005 2004 Revenue 12,281 15,464 37,124 Net earnings 2,519 1,098 1,993 EPS 0.10 0.04 0.10 Operating cash (1,792) 31 13,927 Capital Spending 1,091 1,517 2,053 (thousand $ except per share data)
Slide 25: Debt:Equity Ratio
25 Debt & Debt:Equity Ratio 80 1.60 70 1.40 60 1.20 Debt:Equity Ratio Debt (millions $) 50 1.00 40 0.80 30 0.60 20 0.40 10 0.20 0 0.00 2000 2001 2002 2003 2004 Cogema Debt:Equity Ratio
Slide 26: Liquidity
26 Liquidity At June 30, 2005: Cash resources of $6,261,000 Ability to redraw $25,739,000 from the Cogema loan facility
Slide 27: Test Mining
27 Test Mining ~ 36” ~ 96” ~ 120-144” ~ 48” ~ 72”
Slide 28: Denison – Test Mining
28 Denison – Test Mining Radiometric 10 000 CPS Scanner Drill rig ORE STORAGE ORE PROCESSING Scanning & Ore bin weighting (3) (2) (1) Ore zone Mining Cavity
Slide 29: Denison Athabasca Properties
29 Denison Athabasca Properties
Slide 30: Denison Exploration
30 Denison Exploration Staff • William Kerr, Director Resource Evaluations • Nancy Normore, Project Geologist • Alison Bragg, Project Geologist Consultants • Gary Cohoon, Geologist • Don Carriere, Geophysicist • Blair Needham, Geologist • Suraj Ahuja, Geologist
Slide 31: McClean Lake Mining Lease
31 McClean Lake Mining Lease J E B M IL L Denison has 22.5% interest P a t L a ke Will be the 2nd largest uranium mill complex in 2007 Sue trend - over 40 million lbs combined production and reserves T o rw alt L ak e McClean North trend – 4.5 million lbs reserves (and M offat Lake under-explored).
Slide 32: Exploration – McClean Lake
32 Exploration – McClean Lake LO CA TIO N OF P R OP OS ED MINING EQU IP M EN T D E VEL OPM E NT P RO G RA M
Slide 33: McClean N/S Area, Geological Compilation
33 McClean N/S Area, Geological Compilation S787 S789 S786 t. Ex 6459000 3020 ul t 3020A Fa S803 e ak 3007 S802 tt L MC14 •Estimate 4,000 metres for prelim 3036 MC11 ffa 3037 TW02 00 TW04 0+ Mo TW01 Mc CLEAN NORTH 1102 BL TW06 3014 1106 TW05 1109 test for basement type uranium TW07 1107 Pod 5 1100 1
Slide 34: Wolly Joint Venture
34 Wolly Joint Venture 23,700 hectare property, underexplored with respect to McClean Denison earning 22.5% interest by spending $5 million over 6 years Average of only 100 metres depth to unconformity Explored since 1978, 8 high-potential areas, some with ore-grade intersections. Untested b
Slide 35: Wolly Project-background
35 Wolly Project-background Predominance of vertical holes vs angle holes, weak stratigraphy knowledge Basement potential ignored. Many holes drilled to either just below U/C or at predetermined depth and stopped—often in graphite. At the Sue trend--order of magnitude more ore in basement than
Slide 36: Wheeler River Joint Venture
36 Wheeler River Joint Venture • Denison 40% (to 60%) • Cameco 48% • OURD 12% K Zone, 0.11% U308 6.5 M M Zone, 0.79%U308/5.75 M Quartzite ridge • Large, 12,225 hectare property • Unconformity depths 250-550 metres • Similar geology to P2 North zone at McArthur River O Zone, • 150 line kilometres of
Slide 37: Midwest Area (25.17%) Winter 2005 mineralization
•Angle or stratigraphic holes rare 37 Midwest Area (25.17%) •Potential for basement mineralization anywhere along mineralized trend 556000mE •Estimate 3,000 metres for follow up testing of anomalous area between deposit and north zones Winter 2005 64 6 6 00 0m N 6 4 66 00 0mN •Estimate 5,000
Slide 38: MIDWEST
38 MIDWEST •Estimate of 2,500 metres for preliminary test of deeper basement mineralization below existing deposit (Indications of mineralization up to 100 metres below U/C) Hole 530 - u/c @ 209m from 209 to 230m = 0.10% U308 Hole 531 - u/c @ 209.3m ??? from 219 to 228.5m = 1.32% U308 with 2m of 5.1
Slide 39: Mongolia
39 Mongolia Den will acquire a 25% interest in 35 leases and licences on properties comprising over 27,000 sq. km. Partner is Cogegobi, a COGEMA subsidiary Den will fund 28% of 2005 expenditures incurred to date and 28% of the future expenditures 2005 total project expenditures- US$850k
Slide 40: Elliot Lake Before Decommissioning
40 Elliot Lake Before Decommissioning
Slide 41: Elliot Lake After Decommissioning
41 Elliot Lake After Decommissioning
Slide 42: Denison Environmental Services
42 Denison Environmental Services 2005 ytd sales $2.3 million and earnings $0.053 million Turning a liability into a business opportunity Site restoration, asset disposal, treatment & monitoring of mine wastes Clients include: • Algoma Steel Inc. • BHP Billiton • Cambior Inc. • Gov’t of Newf
Slide 43: Uranium Participation Corporation
43 Uranium Participation Corporation $100 million IPO Purpose to buy and hold U3O8 Denison will act as manager Annual fee $400k minimum plus 1.5% commission on purchase and sale
Slide 44: 2005 Expectations
44 2005 Expectations Increased earnings • Escalating uranium prices • No debt • Revenues from UPC • Revenues from DES Positive exploration results • Midwest, Wheeler River & McClean Lake Successful completion of test mining program Continue to pursue new opportunities
Slide 45: Experienced Directors
45 Experienced Directors W. Robert Dengler Vice-Chairman & Director, Aurora, ON Dynatec Corporation Janet L. Ecker Advisor, Ajax, Ontario LeDrew Laishley Reed LLP E. Peter Farmer President & CEO, Toronto, ON Denison Mines Inc. Brian A. Johnson President and CEO, Saskatoon, SK Crown Life Insurance Co
Slide 46: Denison Mines Inc. TSX: DEN
46 Denison Mines Inc. TSX: DEN Contact: E. Peter Farmer 595 Bay Street, Suite 402 Toronto ON M5G 2C2 Tel: 416-979-1991 Email: pfarmer@denisonmines.com Web Site: www.denisonmines.com
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