Denison Mines Corp. · TSX:DML
Denison Mines — Investor Presentation (November 2005)
51 slides from Denison Mines's investor presentation, November 2005
Slide 1: E. Peter Farmer, President & CEO, November 2005
1 E. Peter Farmer President & CEO November, 2005
Slide 2: Forward Looking Statements
2 Forward Looking Statements Some statements in this presentation may be considered forward looking. Such statements are based on assumptions and estimates related to future market conditions, and as such, involve risks, uncertainties and other factors that could cause actual results to differ mat
Slide 3: Corporate Overview
3 Corporate Overview 25,518,774 shares o/s Market Cap: ~$350M TSX: DEN Operating Divisions • Uranium exploration, development & production • Environmental services Manager, Uranium Participation Corporation Estimated Exploration Spending: 2005: $3.5 million 2006: $5.0 million Debt outs
Slide 4: Investment Highlights
4 Investment Highlights Pure uranium play The third largest producer in the Athabasca Basin 22.5% interest in the sixth largest uranium facility in the world that is capable of further expansion Attractive, high potential exploration properties in close proximity to existing mills 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 = 59% of demand Currently – very tight supply/demand with rising prices
Slide 6: Uranium Supply/Demand Balance - 2004
6 Uranium Supply/Demand Balance - 2004 Balance: Mostly Commercial Inventory Drawdown 2004 U3O8 (millions lbs) World Nuclear Requirements 171.6 Selected Secondary Primary Mine Supply 104.6 Sources Selected Secondary Sources: 43.0 HEU Agreement, Rosatom World tails stripping for Urenco & Nuclear Areva
Slide 7: Supply/Demand Gap
7 Supply/Demand Gap Electrical demand increasing by 2.5%/yr. Nuclear now competitive Coal & oil fired electrical power being replaced by nuclear 23 new reactors under construction (further 39 planned) – China, India, South Korea, Japan & Russia Uranium demand increasing by at least 1.5%/yr
Slide 8: Gap Reduction
8 Gap Reduction Cigar Lake production starts in 2007 • 18M pounds/year by 2010 Smaller, new operations – U.S. & Namibia Increased production – McArthur River, Olympic Dam, Kazakhstan & Smith Ranch More production required to balance supply & demand At least 10 years required to a develop s
Slide 9: Spot Uranium Prices
9 Spot Uranium Prices $50 US$43.40 October 2005 Spot Peak Three Mile US$33.25 Island LT Contract US$34.00 $40 $30 (US$/lb.) Cancelled Russian HEU Reactors Agreement Chernobyl Cancelled Options $20 $10 Nuclear Arab Oil Low US$7.10 in Disarmament Embargo Dec 2000 $0 72 74 76 78 80 82 84 86 88 90 92 94
Slide 10: U3O8 in the Cost of Electricity (2004)
10 U3O8 In the Cost of Electricity (2004) (Based on cost of a nuclear plant built in 2004) Fuel 11% 3.5% U3O8 5.6% U3O8 O&M 32% 5.1% Conversion & Enrichment Conversion & 5.1% Enrichment 2.4% Fuel Fabrication Capital 57% 2004 2.3% Fuel Fabrication Current Spot • Doubling of the total 2004 fuel cost •
Slide 11: Power Industry Production Costs
11 Power Industry Production Costs Fuel as a percentage of Electrical Power Industry Production Costs (2004) 100% 25% 80% 60% 76% 91% 88% Fuel O&M 40% 75% 20% 24% 9% 12% 0% Nuclear Coal Gas Oil Source: Nuclear Energy Institute, EUCG & Energy Velocity
Slide 12: Levelized Cost of Electricity (US$)
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 resources at: Millions of lbs of U308 Caribou, Sue E, Sue D, or new discoveries. 10 8 Cigar Lake Phase 1 6 4 Ore Stockpiles Other 2 McClean Ores Midwest Ores 0 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 19 20 20 2
Slide 18: Denison's Uranium Reserves (09/05)
18 Denison’s Uranium Reserves (09/05) Ore Grade U3O8 (000 tonnes) (% U3O8) (Million lbs.) RESERVES Ore Stockpile 31 1.17 0.8 Sue A, B & E 111 0.79 1.9 McClean North 8 5.54 1.0 Midwest 87 5.47 10.5 Total Reserves: 237 3.68 14.2
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 8.38M pounds of Ni and .65M 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 € 10 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, Kazakhs
Slide 21: 2005 Sales Expectations
21 2005 Sales Expectations Sales volume objective is a reduction of 17% from 2004 (revenue reduction <10%) Sales expected be apportioned by quarter as follows: Q1- 8%, Q2 - 30%, Q3 - 23%, Q4 - 39% Approximately 22% of expected 2005 volumes to be sold at or near market prices
Slide 22: 2006 Sales Expectations
22 2006 Sales Expectations Volumes within 10% of 2005 volumes One-third will be sold under legacy contracts at historical pricing below market One-third with price currently under negotiation for next year One-third at or near market price
Slide 23: Financial Highlights
23 Financial Highlights Q3 9 Mo Year 2005 2005 2004 Revenue 8,549 24,013 37,124 Net Earnings (Loss) (891) 207 1,993 EPS (0.04) 0.01 0.10 Operating Cash 5,101 5,132 13,927 Capital Spending 1,477 2,994 5,889 Exploration Expense 1,130 2,065 368 (thousand $ except per share data)
Slide 24: Debt:Equity Ratio
24 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 2005 Cogema Debt:Equity Ratio
Slide 25: Liquidity
25 Liquidity At September 30, 2005: Cash resources of $10,759,000 Ability to redraw $21,221,000 from the Cogema loan facility $500,000 line of credit arranged with Bank of Nova Scotia
Slide 26: Test Mining
26 Test Mining ~ 36” ~ 96” ~ 120-144” ~ 48” ~ 72”
Slide 27: Test Mining Achievements
27 Test Mining Achievements Facilities constructed and can be fully operational on a large scale Specialty equipment developed, manufactured and substantially commissioned Overall system has proved to work Test mining will proceed and, subject to regulatory approval, will drill and mine from
Slide 28: Denison Athabasca Properties
28 Denison Athabasca Properties
Slide 29: Denison Exploration
29 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 30: McClean Lake Mining Lease
30 McClean Lake Mining Lease Denison has 22.5% interest JE B M ILL Will be 2nd largest uranium mill complex in 2007 Sue trend – over 40 Million lbs combined P at L ake production & reserves McClean North trend – 5.3 million lbs reserves (and under-explored). Blindshaft boring test this year.
Slide 31: McClean N/S Area: Geological Compilation
31 McClean N/S Area: Geological Compilation S787 S789 S786 xt. lt E 6459000 3020 3020A • Estimate 4,000 metres for prelim au eF S803 ak 3007 S802 tt L MC14 test for basement type uranium 3036 MC11 ffa 3037 TW02 00 TW04 0+ Mo TW01 Mc CLEAN NORTH 1102 BL TW06 3014 1106 TW05 1109 TW07 1107 Pod 5 1100 1
Slide 32: Wolly Joint Venture
32 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 33: Wolly Project - background
33 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
Slide 34: Wolly Project - plans
34 Wolly Project - plans Denison, working with Cogema, conducting a review of all holes, geophysics, and geology. Snake Lake area initial compilation completion date mid November--should have some defined drill targets at that time. Initial target focus in Snake Lake area is east west trending u
Slide 35: Wolly (Snake Lake Area)
35 Wolly (Snake Lake Area) • Along strike of JEB trend • Strong illite alteration in sandstone • Anomalous U in basement rocks Example - DDH FS-14 and 16 • Major east-west unconformity offset (30 M) contain 1043 and 1461 cps, • Apparent intersecting structures, untested not followed up. Many other s
Slide 36: Wolly (Top Creek and Moonlight)
36 Wolly (Top Creek and Moonlight) • High U geochem values in sandstone. Conductor strongly anomalous in Cu, Ni, As, and V. • Significant unconformity offsets • Drilled at only 200 to 400 m intervals • Sandstone thickness 110 metres • Known basement hosted mineralization (1.18% U308/0.5 M) in MN 8 a
Slide 37: Wolly (Mallen Lake)
37 Wolly (Mallen Lake) • U in basement 5.95% U308/0.3 M in 131-79 and 2.49% U308/.3 M in 152-79 • U/C elevation difference • Sandstone thickness 70 metres
Slide 38: Wolly (Burnt Island)
38 Wolly (Burnt Island) • 1.8% U308 over 0.5 M in basement in BT 2. Intense hydrothermal alteration and graphite destruction below U/C • Structurally complex area, needs detail geophysics • Needs angle (stratigraphic) drilling • Sandstone thickness 130 metres
Slide 39: Wolly (Pat Lake)
39 Wolly (Pat Lake) • Large structural zone with weak unconformity mineralization • Boron enrichment locally • Sandstone thickness 160 metres
Slide 40: Wolly (Dawn Lake Extension)
40 Wolly (Dawn Lake Extension) • Extension of Dawn Lake trend to West • Weak U/C mineralization intersected to north of zone, not followed up. Also VT45 intersected five anomalous probe peaks to 3217 in semi-pelites • Sandstone thickness 175 metres
Slide 41: Wheeler River Joint Venture
41 Wheeler River Joint Venture • Denison 40% (to 60%) • Cameco 48% • JCU 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 g
Slide 42: Midwest Area (25.17%)
42 Midwest Area (25.17%) • Estimate 3,000 metres for follow up testing of anomalous area between Winter 2005 deposit and north zones mineralization • Estimate 5,000 metres for definition drilling of north zone (11.67% U308 /7.1 metres & 6.25% U308 /7.1 metres) Midwest Deposit (41.7M lbs U308 at 5.47
Slide 43: Midwest
43 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.
Slide 44: Waterfound River Property
44 Waterfound River Property D-6 L5 L6 S-101811 D-6 L7 S-104741 WF-21 WF-23 D-1 E-1 S-101807 WF-16 S-101808 WF-04 WF-17 6485000mN SH-02 SH-02 WF-18 WF-18 E-2 S-101809 WF-09 WF-13 WF-14 WF-19 D-1 WF-08 WF-20 WF-28 WF-27 WF-27 WF-11 D-1 WF-29 WF-32 WF-07 WF-10 WF-25A GRID D WF-
Slide 45: Mongolia
45 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 for
Slide 46: Elliot Lake Before Decommissioning
46 Elliot Lake Before Decommissioning
Slide 47: Elliot Lake After Decommissioning
47 Elliot Lake After Decommissioning
Slide 48: Denison Environmental Services
48 Denison Environmental Services 2005 ytd sales $4.4 million and earnings $0.443 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 49: Experienced Directors
49 Experienced Directors W. Robert Dengler Vice-Chairman & Director, Aurora, ON Dynatec Corporation Janet L. Ecker Advisor, Ajax, ON LeDrew Laishley Reed LLP E. Peter Farmer President & CEO, Toronto, ON Denison Mines Inc. Brian A. Johnson President and CEO, Regina, SK Crown Life Insurance Company Pa
Slide 50: Experienced Management Team
50 Experienced Management Team E. Peter Farmer, President & Chief Executive Officer James Anderson, Executive Vice President & CFO Donald Campbell, V P Marketing & Special Projects Michael Schoonderwoerd, Corporate Controller Sheila Colman, General Counsel & Corporate Secretary Ian Ludgate, Manager,
Slide 51: Denison Mines Inc. TSX: DEN
51 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
Denison Mines — Investor Presentation (November 2005) on 6ix