Denison Mines Corp. · TSX:DML
Denison Mines — Investor Presentation (May 2005)
36 slides from Denison Mines's investor presentation, May 5, 2005
Slide 1: E. Peter Farmer, President & CEO, Montreal
1 E. Peter Farmer President & CEO Montreal, May 5, 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 25,302,306 shares o/s Market Cap: ~$400 M TSX: DEN Operating Divisions • Uranium exploration, development & production • Environmental services 2005 Exploration Budget: $3.0 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
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 10 years required to develop new mine U3O8
Slide 9: Spot Market for Uranium
9 Spot Market for Uranium $25 $20 (US$/lb.) $15 $10 U3O8 Spot Prices $5 $0 2000 2001 2002 2003 2004 2005
Slide 10: U3O8 in the Cost of Electricity
10 U3O8 In the Cost of Electricity Fuel 11% 3.5% U3O8 O&M 32% 5.1% Conversion and Enrichment 2.4% Fuel Fabrication Capital 57% • Doubling of the total fuel cost would add 11% to the cost of electricity in a new Nuclear Power Plant. Based on cost of nuclear plant built today. • Doubling of the cost o
Slide 11: Power Industry Production Costs
11 Power Industry Production Costs Fuel as a Percentage of Electric Power Industry Production Costs (2003) 100% 25% 80% 60% 75% 90% 87% 40% 75% 20% 25% 10% 13% 0% Nuclear Coal Gas Oil O&M Fuel Source: RDI Updated 10/04
Slide 12: Levelized Cost of Electricity (US$)
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: McClean Mill Production Profile
15 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 16: COGEMA – Our Partner
16 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 17: 2004 Financial Highlights
17 2004 Financial Highlights 2004 2003 Revenue 37,124 28,175 Net Earnings (loss) 1,993 (3,123) Earnings per Share (loss) $0.10 $(0.17) Cash from Operations 13,927 8,000 Capital Expenditures 2,053 871 (thousand $ except per share data)
Slide 18: Debt:Equity Ratio
18 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 19: Cash Generated by Operations
19 Cash Generated by Operations 16 14 12 (millions $) 10 8 6 4 2 0 2003 2004
Slide 20: Denison Mission
20 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 21: 2005 Objectives
21 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 to commence su
Slide 22: Denison Exploration – Blind Boring
22 Denison Exploration – Blind Boring Radiometric 10 000 CPS Scanner Drill rig ORE STORAGE ORE PROCESSING Scanning & Ore bin weighting (3) (2) (1) Ore zone Mining Cavity
Slide 23: Denison Athabasca Properties
23 Denison Athabasca Properties
Slide 24: McClean Lake Mining Lease
24 McClean Lake Mining Lease JE B M ILL Denison has 22.5% interest Will be 2nd largest uranium mill P at L ake complex in 2006 Sue trend – over 40 Million lbs combined production & reserves McClean North trend – 4.5 million lbs reserves (and under- Torw alt Lake Moffat Lake explored). Blinds
Slide 25: Waterfound – Joint Venture
25 Waterfound – Joint Venture 6490000mN 6490000mN 00 +00 0+ BL0 0 0E 405± 4+ E 00 8+ GRID J E 00 12+ 0E +0 Alligator Prospect 00S 16 10+ 00E 0E +0 12,127 hectare property 24+ 20 405± 0E +0 28 E 00 32+ E 00 36+ E 00 40+ 0E +0 44 E 393± 00 Denison holds 14.7
Slide 26: Wolly Joint Venture
26 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 27: Wheeler River Joint Venture
27 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 28: Midwest Joint Venture
28 Midwest Joint Venture Denison holds 25.17% 64 660 00 m N interest M L 5264 MW -660 33.5 million lbs U3O8 in open pitable reserves 6 4640 00 m N Unconformity style deposit MMidw estT IDW ES DDEPO eposit SIT but basement potential not 6 462 00 0m N tested 90 5 2005 intersection in hole MW-
Slide 29: Elliot Lake Before Decommissioning
29 Elliot Lake Before Decommissioning
Slide 30: Elliot Lake After Decommissioning
30 Elliot Lake After Decommissioning
Slide 31: Denison Environmental Services
31 Denison Environmental Services 2004 sales $5.8 million and earnings $0.6 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 Newfoundla
Slide 32: Uranium Participation Corporation
32 Uranium Participation Corporation $60-$80 million to $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 33: 2005 Expectations
33 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 34: Experienced Management Team
34 Experienced Management Team E. Peter Farmer, President & Chief Executive Officer James Anderson, Executive Vice President & CFO Donald Campbell, VP Marketing & Special Projects Michael Schoonderwoerd, Controller Sheila Colman, General Counsel & Corporate Secretary Ian Ludgate, Manager, Denison En
Slide 35: Experienced Directors
35 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, Regina, SK Crown Life Insurance Compa
Slide 36: Denison Mines Inc. TSX: DEN
36 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