Denison Mines Corp. Reports First Quarter 2013 Results

TORONTO, ONTARIO--(Marketwired - May 8, 2013) - Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE MKT:DNN) today reported its results for the three months ended March 31, 2013. All amounts in this release are in U.S. dollars unless otherwise stated.

First Quarter 2013 Highlights

• Discovered new unconformity related uranium mineralization approximately 2.1 kilometres northeast of the Phoenix deposits (the "489 Zone") at Wheeler River. Rock types, alteration and structure are similar to the Phoenix deposits. Mineralization has been intersected on both drill hole fences completed to date, and the zone is open along strike in both directions.

• Completed a plan of arrangement ("JNR Arrangement") with JNR Resources Inc. ("JNR") and acquired all of the outstanding common shares of JNR, at an exchange ratio of 0.073, on January 31, 2013. The acquisition increased Denison's interests in five exploration property joint arrangements with JNR to 100%, and added seven exploration properties to Denison's property portfolio in Saskatchewan as well as two properties in Newfoundland.

• Entered into an arrangement agreement ("Fission Arrangement") with Fission Energy Corp. ("Fission") on March 7, 2013, and in the second quarter completed the acquisition of a portfolio of assets from Fission including Fission's 60% interest in the Waterbury Lake uranium project, as well as Fission's exploration interests in all other properties in the eastern part of the Athabasca Basin, Quebec and Nunavut, plus interests in two joint ventures in Namibia. Fission shareholders received 0.355 of a common share of Denison and CAD$0.0001 for each share of Fission.

Financial Results

The Company recorded a net loss from continuing operations of $5,469,000 ($0.01 per share) for the three months ended March 31, 2013, compared with a net loss from continuing operations of $9,516,000 ($0.03 per share) for the three months ended March 31, 2012. During the three months ended March 31, 2012, the Company also recorded a loss of $42,475,000 ($0.11 per share) from discontinued operations.

Revenue

Revenue from Denison Environmental Services ("DES") for the three months ended March 31, 2013 was $1,907,000 compared to $3,169,000 in the same period in 2012. Revenue decreased in 2013 due to the expiry of the Faro contract in March 2012.

Revenue from the management contract with Uranium Participation Corp. ("UPC") for the three months ended March 31, 2013 was $384,000 compared to $435,000 for the same period in 2012.

Operating Expenses

The McClean Lake mill remained on stand-by during the first quarter of 2013. The Cigar Lake joint venture continues to pay nearly all of the stand-by expenses under the terms of a toll milling agreement. Denison's share of operating costs for the three months ended March 31, 2013 totaled $270,000 compared to $510,000 for the three months ended March 31, 2012. Operating costs were lower in 2013 primarily due to lower expenditures on the Surface Access Borehole Resource Extraction ("SABRE") program, which is not part of stand-by costs. The mill is anticipated to restart operations later in 2013 to begin processing of ore received from the Cigar Lake mine.

Operating expenses also include costs relating to DES amounting to $1,937,000 for the three months ended March 31, 2013 compared to $3,021,000 for the same period in 2012. DES costs decreased in 2013 due to the expiry of the Faro contract in March 2012.

Mineral Property Exploration

Denison is engaged in uranium exploration, as both operator and non-operator of joint arrangements and as operator of its own properties in Canada, Zambia and Mongolia. Exploration expenditures for the three months ended March 31, 2013 were $4,709,000 compared to $3,020,000 for the three months ended March 31, 2012. The increase in exploration expenditures during the first three months of 2013 was due to increased exploration activity in Canada.

In Canada, Denison's share of exploration spending totaled $4,173,000 for the three months ended March 31, 2013 and $2,595,000 for the three months ended March 31, 2012.

At the 60% owned Wheeler River project, a total of 14,577 metres of exploration and infill drilling was completed in 27 drill holes during the three months ended March 31, 2013. Sixteen of the drill holes were completed on five different exploration target areas (489 Zone, K Zone, Phoenix North, 232 area and the REA area) on the Wheeler River property. The highlight of the winter program was the discovery of new unconformity related uranium mineralization at the 489 Zone. Located approximately 2.1 kilometres northeast of the Phoenix deposits, the 489 Zone straddles the sub-Athabasca unconformity at a vertical depth of 380 metres below surface. The rock types, alteration and structure are similar to the Phoenix deposits. Mineralization has now been intersected on both drill hole fences completed to date, which are about 65 metres apart. The zone is open along strike in both directions. A summer drill program is planned to aggressively follow up on these results.

The table below summarizes the mineralized intersections in the 489 Zone:

On the other four exploration target areas, encouraging geochemistry and alteration was observed at Phoenix North, and the K Zone. Further work is required to follow up on these results, some of which is expected to be a part of this summer's activities. No significant mineralization, alteration or geochemistry was observed at the 232 and REA areas. Another five drill holes explored for basement mineralization proximal to the north end of the Phoenix A deposit. Although no significant mineralization was intersected, this area remains open for further testing.

The remainder of the winter program included four infill drill holes completed in the Phoenix A deposit where high-grade uranium mineralization was intersected in all four drill holes:

At the Hatchet Lake project (50% Denison, 50% Anthem Resources Inc.), a total of 2,370 metres of exploration drilling was completed in 13 drill holes during the three months ended March 31, 2013. Uranium mineralization was intersected at the unconformity in two drill holes on the Crooked-Richardson Lakes trend. The best result was in drill hole RL-13-16, which intersected 0.45% U₃O₈ over 2.3 metres beginning at 124.0 metres down the drill hole. Further drilling is required to follow up on these results.

In Zambia, exploration expenditures of $195,000 were incurred during the three months ended March 31, 2013 on the Company's Mutanga project, compared to $119,000 for the three months ended March 31, 2012. Soil geochemical surveying and radon sampling programs started at Mutanga during the three months ended March 31, 2013.

In Mongolia, exploration expenditures on the Company's GSJV properties totaled $341,000 for the three months ended March 31, 2013, compared to $306,000 for the three months ended March 31, 2012. Expenditures during the three months ended March 31, 2013 were primarily annual license payments.

The Company and Mon-Atom LLC, the Mongolian state-owned uranium company, are continuing to pursue restructuring of the GSJV to meet the requirements of the Nuclear Energy Law. The Company currently has an 85% interest in the GSJV, with Mon Atom LLC holding the remaining 15% interest. Depending on the amount of historic exploration that was funded by the Government of Mongolia, Mon-Atom LLC is entitled to hold a 34% to 51% interest in the GSJV. Discussions with relevant government agencies are on-going, and the timing for completion of the restructuring is uncertain at this time. In the meantime, activities continue in support of converting the GSJV exploration licenses to mining licenses.

General and Administrative

General and administrative expenses totaled $1,903,000 for the three months ended March 31, 2013 compared with $2,605,000 for the three months ended March 31, 2012. General and administrative expenses consist primarily of payroll and related expenses for personnel, contract and professional services, stock option expense and other public company expenditures. General and administrative expenditures declined in 2013 largely as a result of a decrease in share-based compensation and personnel costs from the implementation of various staff reduction plans in late 2012 and early 2013.

Liquidity & Capital Resources

Cash and cash equivalents were $26,907,000 at March 31, 2013 compared with $38,188,000 at December 31, 2012. The decrease of $11,281,000 was primarily due to cash used in operations of $9,098,000 and cash used in investing activities of $1,598,000.

Net cash used in operating activities of $9,098,000 in the three months ended March 31, 2013 is comprised of net loss for the period adjusted for non-cash items and changes in working capital items. Significant changes in working capital items during the period include an increase of $1,433,000 in trade and other receivables and a decrease of $1,047,000 in accounts payable and accrued liabilities.

Net cash used in investing activities of $1,598,000 consists primarily of $715,000 spent on the JNR Arrangement and $703,000 deposited in the Elliot Lake reclamation trust fund.

The Company has in place a revolving credit facility for up to $15,000,000. The facility expires on June 28, 2013. Bank indebtedness under the facility at March 31, 2013 was nil; however, $9,546,000 of the line is used as collateral for certain letters of credit. As part of the credit facility, the Company has provided an unlimited full recourse guarantee and a pledge of all of the shares of Denison Mines Inc.

Subsequent Events

On April 1, 2013, a new management services agreement was signed with UPC after the expiry of the original management services agreement. Under the terms of the new agreement, UPC will pay the following fees to Denison: (a) a commission of 1.5% of the gross value of any purchases or sales of uranium completed at the request of the Board of Directors of UPC; (b) a minimum annual management fee of CAD$400,000 (plus reasonable out-of-pocket expenses) plus an additional fee of 0.3% per annum based upon UPC's net asset value in excess of CAD$100,000,000; and (c) a fee, at the discretion of UPC's Board, for on-going monitoring or work associated with a transaction or arrangement (other than a financing, or the purchase or sale of uranium). The new management services agreement has a three-year term and may be terminated by either party upon the provision of 120 days written notice.

On April 26, 2013, the Company completed the Fission Arrangement, pursuant to which it acquired Fission's Eastern Athabasca property interests, including its 60% interest in the Waterbury Lake uranium project, and its property interests in Quebec Nunavut, and Namibia. Fission shareholders received 0.355 of a common share of Denison, a cash payment of CAD$0.0001, and one common share of a newly-formed publicly traded company, Fission Uranium Corp., for each Fission share held. On closing, Denison issued 53,053,284 common shares with a value of approximately CAD$67,378,000 based on Denison's closing share price of CAD$1.27 per share on April 26, 2013. All of the outstanding options and common share purchase warrants of Fission were exchanged for options and warrants to purchase 3,485,889 common shares of Denison with a fair value of approximately CAD$2,184,000 as determined by the Black-Scholes option pricing model. Prior to closing, cash of CAD$2,437,000 was advanced to Fission, in respect of the expenditures incurred and paid by Fission between January 16, 2013 and April 25, 2013 on properties that were ultimately acquired by Denison. Further additional consideration may be required under the Fission Arrangement.

Outlook for 2013

Canada

Exploration

Given the recently completed Fission Arrangement, the Company is in the process of reviewing its Canadian exploration programs for the remainder of the year. The Company is still planning to spend approximately CAD$9,900,000. At this time, Denison plans to carry out four exploration programs during the remainder of 2013, of which Wheeler River will continue to be the primary focus. At Wheeler River, a 13,000 metre summer drill program is planned at a total estimated cost of CAD$3,400,000 (Denison's share CAD$2,040,000). The summer drill program at Wheeler River will focus on the newly discovered 489 Zone of mineralization and the Phoenix North areas as well as some additional drilling in the Phoenix A deposit in an attempt to increase the mineral resources.

Summer drill programs are also planned for Crawford Lake (2,600 metres) and Bachman Lake (650 metres). Geophysical surveys are currently ongoing or are planned to be carried out on the Bell Lake, Wheeler River and Stevenson River properties.

On the newly acquired Waterbury Lake project, Denison plans to work with its partner to evaluate previous exploration results on the entire property and develop a future work plan.

Development / Operations

Approximately CAD$3,500,000 (Denison's share CAD$814,000) is budgeted for the Midwest and McClean Underground development stage projects and the SABRE program in 2013. The majority of the expenditures are planned for the evaluation of the results of the SABRE two hole test program completed in 2012 and the preliminary evaluation of the SABRE mining method for the Caribou deposit. The McClean Underground project Feasibility Study was completed in the fourth quarter of 2012, and a production decision was deferred due to the poor condition of the uranium market. A production decision will be revisited in 2013. Very little work is currently planned on the Midwest project.

The McClean Lake mill continues to be on stand-by, but activity at the mill has ramped up in preparation for processing of Cigar Lake ore anticipated to begin later in 2013. Denison's share of operating and capital expenditures in 2013 is estimated at CAD$1,800,000. Denison expenditures are expected to be offset by revenue projected at CAD$1,500,000 from toll milling revenues and the proceeds from the sale of approximately 25,000 pounds U₃O₈ recovered from McClean Lake ores processed as part of the Cigar Lake commissioning efforts. Construction on the McClean Lake mill expansion, which is 100% funded by the Cigar Lake joint venture, began last summer and will increase annual production capacity to 24 million pounds U₃O₈.

International

On its wholly owned Mutanga project in Zambia, the Company is carrying out an extensive program of geological mapping as well as geochemical and geophysical surveying to increase the confidence in existing drill targets and identify new targets. At this point no exploration drilling is planned for 2013. The Zambian program will total an estimated $3,500,000.

On the newly acquired Dome project in Namibia, where Denison currently holds a 75% interest, Denison has been advised that Rio Tinto plans to spend $1,400,000 on a 2,000 metre drill program as part of that company's earn in obligations. Rio Tinto must spend $5,000,000 by the end of 2016 to earn a 49% interest in the joint arrangement.

In Mongolia, mining license applications for its four license areas were submitted in 2011 and the Company is continuing to work to restructure the GSJV to meet the requirements of the Mongolian Nuclear Energy Law. In 2013, the Mongolian program is estimated at $1,700,000. The focus in 2013 will be on the ongoing restructuring efforts and the work necessary to obtain the mining licenses.

Qualified Person

The disclosure of scientific and technical information regarding Denison's properties in this press release was prepared by or reviewed by Steve Blower, P. Geo., the Company's Vice President, Exploration, and Terry Wetz, P.E., the Company's Vice President, Project Development, who are Qualified Persons in accordance with the requirements of NI 43-101. For a description of the quality assurance program and quality control measures applied by Denison, please see Denison's Annual Information Form dated March 13, 2013 available at http://www.sedar.com, and its Form 40-F available at http://www.sec.gov/edgar.shtml.

Additional Information

Denison's consolidated financial statements for the three month period ended March 31, 2013 and related management's discussion and analysis are available on Denison's website at www.denisonmines.com or under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

About Denison

Denison is a uranium exploration and development company with interests in exploration and development projects in Canada, Zambia, Namibia, and Mongolia. Including the high grade Phoenix deposits, located on its 60% owned Wheeler project, Denison's exploration project portfolio includes 50 projects and totals approximately 658,000 hectares in the Eastern Athabasca Basin region of Saskatchewan. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill, one of the world's largest uranium processing facilities, plus a 25.17% interest in the Midwest deposit and a 60% interest in the J-Zone deposit on the Waterbury property. Both the Midwest and J-Zone deposits are located within 20 kilometres of the McClean Lake mill. Internationally, Denison owns 100% of the conventional heap leach Mutanga project in Zambia, a 75% interest in the newly acquired Dome project in Namibia, and an 85% interest in the in-situ recovery projects held by the Gurvan Saihan joint venture ("GSJV") in Mongolia.

Denison is engaged in mine decommissioning and environmental services through its Denison Environmental Services ("DES") division and is the manager of Uranium Participation Corporation ("UPC"), a publicly traded company which invests in uranium oxide and uranium hexafluoride.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain information contained in this press release constitutes "forward-looking information", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and similar 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" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", 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".

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. 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 correct and such forward-looking information included in this press release should not be unduly relied upon. This information speaks only as of the date of this press release. In particular, this press release may contain forward-looking information pertaining to the following: the estimates of Denison's mineral reserves and mineral resources; expectations regarding the toll milling of Cigar Lake ores; capital expenditure programs, estimated exploration and development expenditures and reclamation costs; expectations of market prices and costs; supply and demand for uranium ("U₃O₈"); possible impacts of litigation and regulatory actions on Denison; exploration, development and expansion plans and objectives; expectations regarding adding to its mineral reserves and resources through acquisitions and exploration; and receipt of regulatory approvals, permits and licenses under governmental regulatory regimes.

There can be no assurance that such statements will prove to be accurate, as Denison's actual results and future events could differ materially from those anticipated in this forward-looking information as a result of the factors discussed in or referred to under the heading "Risk Factors" in Denison's Annual Information Form dated March 13, 2013 available at http://www.sedar.com, and in its Form 40-F available at http://www.sec.gov/edgar.shtml.

Accordingly, readers should not place undue reliance on forward-looking statements. These factors are not, and should not be construed as being, exhaustive. 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. The forward-looking information contained in this press release is expressly qualified by this cautionary statement. 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.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Mineral Resources: This press release may use the terms "measured", "indicated" and "inferred" mineral resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred mineral resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. 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.