MIDWEST DEPOSIT

The Midwest Deposit, Northern Saskatechewan

The Midwest and Midwest A uranium deposits at the Midwest project are two of several high-grade deposits at or near the contact between the basement complex and the sandstone in the Athabasca Basin in northern Saskatchewan. Midwest is owned by Denison (25.17%) and its joint venture partners, AREVA Resources Canada Inc. (ARC) (69.16%) and OURD (Canada) Co., Ltd. (OURD) (5.67%). ARC is the operator/manager. Denison, ARC and OURD are also the joint venture partners in the McClean Lake joint venture and the owners of the McClean Lake mill where the Midwest ore is planned to be milled.

The Midwest project is located near South McMahon Lake approximately 15 kilometres from the McClean Lake mill, which began operating in 1999. The site is approximately 750 kilometres north of Saskatoon.

The mineral property consists of three contiguous mineral leases covering an area of 1,426 hectares. The right to mine the Midwest deposit was acquired under these mineral leases, as renewed from time to time. The mineral leases are for terms of 10 years with the right to renew for successive subsequent 10 year periods, provided that the leaseholders are not in default pursuant to the terms of the lease. The term of one of the mineral leases expires in December 2013 and the other two expire in December 2018. The Company expects that the leases will be renewed in the normal course, as required, to enable the Midwest deposit to be fully exploited.

The Midwest ore deposit will be the first to be mined. Various studies since its discovery in 1978 have examined the feasibility of mining by open pit, hydraulic bore-hole mining and underground methods. Mining by open pit has been selected as the preferred method.  The development of this deposit involves draining the Mink Arm of the South McMahon Lake to construct an open pit mine. The pit, as currently designed, is expected to produce an estimated 36 million pounds of U₃O₈. Other deposits and extensions located to the north, south and in the basement could be developed once the pit is nearing completion. Ore from this deposit will be trucked over a dedicated haul road to the McClean Lake mill.

In November 2007, the Midwest joint venture partners made the formal production decision to proceed with development of the Midwest deposit. The capital cost, including surface facilities, the water treatment plant, the haul road and the related mill expansion, was estimated at approximately Cdn$435 million. Expenditures were estimated to be as follows: Cdn$75 million for the water treatment plant, Cdn$115 million for de-watering wells, Cdn$100 million for infrastructure, Cdn$35 million for mobile equipment and maintenance facilities, Cdn$100 million for modification to the mill and Cdn$10 million for miscellaneous capital expenses.

In November 2008, the Midwest joint venture partners announced that the development of the Midwest project will be delayed for an indefinite period. The status of the project will be reviewed every six months. The delay was the result of the global economic climate, delays and uncertainties associated with the regulatory approval process, increasing capital and operating costs and the depressed state of the uranium market. Based on an update of the capital cost estimates completed in 2008, the capital cost increased approximately 50% from the previous estimate of Cdn$435 million. Efforts to optimize the capital expenditures will continue to be made.

The Midwest partners decided to complete the environmental assessment for the project, which has been ongoing since December 2005, and to complete the engineering for the Midwest site. This will enable the project to be advanced to the stage that it is ready to be developed quickly when the market conditions improve. Expenditures on Midwest will be approximately Cdn$12.4 million in 2009, of which Denison’s share is Cdn$3.1 million.

The infrastructure for the Midwest deposit – haul road, power, water treatment and mill expansion – will also serve for the future development for the Midwest A deposit.