Exhibit 99.3



LOGO

DENISON MINES CORP.

Financial Statements

for the years ending

December 31, 2012 and 2011



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Responsibility for Financial Statements

The Companys management is responsible for the integrity and fairness of presentation of these consolidated financial statements. The consolidated financial statements have been prepared by
management, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, for review by the Audit Committee and approval by the Board of Directors.

The preparation of financial statements requires the selection of appropriate accounting policies in accordance with International Financial Reporting
Standards and the use of estimates and judgements by management to present fairly and consistently the consolidated financial position of the Company. Estimates are necessary when transactions affecting the current period cannot be finalized with
certainty until future information becomes available. In making certain material estimates, the Companys management has relied on the judgement of independent specialists.

The Companys management has developed and maintains a system of internal accounting controls to ensure, on a reasonable and cost-effective basis, that the financial information is timely reported
and is accurate and reliable in all material respects and that the Companys assets are appropriately accounted for and adequately safeguarded.

The consolidated financial statements have been audited by PricewaterhouseCoopers LLP, our independent auditor. Its report outlines the scope of its examination and expresses its opinions on the
consolidated financial statements and internal control over financial reporting.



|                                      |  |                                    
|------------------------------------- |  | -----------------------------------
|Original signed by Ron F. Hochstein |  | Original signed by David D. Cates
|                                      | 
|Ron F. Hochstein                      |  | David D. Cates                     
|President and Chief Executive Officer |  | Vice-President Finance & Tax       
|                                      |  | Chief Financial Officer            

March 7, 2013

Managements Report on Internal Control over Financial Reporting

The Companys
management is responsible for establishing and maintaining adequate internal control over financial reporting. Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the Internal Control
 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Companys internal control over financial reporting was effective as at
December 31, 2012.

The effectiveness of the Companys internal control over financial reporting as at December 31, 2012 has
been audited by PricewaterhouseCoopers LLP, our independent auditor, as stated in its report which appears herein.

Changes to Internal
Control over Financial Reporting

There has not been any change in the Companys internal control over financial reporting that
occurred during 2012 that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



i



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March 7, 2013

Independent Auditors Report

To the Shareholders of Denison Mines Corp.

We have completed integrated audits of Denison Mines Corp. and its subsidiaries 2012 and 2011 consolidated financial statements and
their internal control over financial reporting as at December 31, 2012. Our opinions, based on our audits are presented below.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of Denison Mines Corp. and its subsidiaries, which comprise the consolidated statements of financial position as at December 31,
2012 and 2011 and the consolidated statements of income (loss) and comprehensive income (loss), changes in equity and cash flow for the years then ended, and the related notes, which comprise a summary of significant accounting policies and other
explanatory information.

Managements responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.

Auditors responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Canadian generally accepted auditing standards also require that we comply with ethical requirements.

An audit involves
performing procedures to obtain audit evidence, on a test basis, about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of
material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Companys preparation and fair presentation of the
consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting principles and policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the
audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Opinion

In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of Denison Mines Corp. and its subsidiaries as at December 31, 2012 and 2011 and their financial performance and their cash flows for the years then ended in accordance with IFRS as issued by the
International Accounting Standards Board.

Report on internal control over financial reporting

We have also audited Denison Mines Corp. and its subsidiaries internal control over financial reporting as at December 31, 2012, based on
criteria established in Internal ControlIntegrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Managements responsibility for internal control over financial reporting

Management
is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control
over Financial Reporting.



ii



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Auditors responsibility

Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects.

An audit of internal control over financial reporting includes obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, based on the assessed risk, and performing such other procedures as
we consider necessary in the circumstances.

We believe that our audit provides a reasonable basis for our audit opinion on the Companys
internal control over financial reporting.

Definition of internal control over financial reporting

A Companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Companys internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors
of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

Inherent limitations

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, Denison Mines
Corp. and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as at December 31, 2012, based on criteria established in Internal ControlIntegrated Framework issued by COSO.

Original signed by PricewaterhouseCoopers LLP

Chartered Accountants, Licensed Public Accountants



iii



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DENISON MINES CORP.

Consolidated Statements of Financial Position

(Expressed in thousands of U.S. dollars except for
share amounts)



|                                                 |  |                    |             |   |                    |   |             |  
|------------------------------------------------ |  | ------------------ | ----------- | - | ------------------ | - | ----------- | -
|                                                 |  | At December 312012 |             |   | At December 312011 |  
|ASSETS                                           |  |                    |             |   |                    |   |             |  
|Current                                          |  |                    |             |   |                    |   |             |  
|Cash and cash equivalents (note 6)               |  | $                  | 38,188      |   |                    | $ | 53,515      |  
|Trade and other receivables (note 7)             |  |                    | 2,638       |   |                    |   | 12,652      |  
|Inventories (note 8)                             |  |                    | 1,792       |   |                    |   | 36,106      |  
|Prepaid expenses and other                       |  |                    | 683         |   |                    |   | 2,534       |  
|                                                 |  |                    |             |   |                    |   |             |  
|                                                 |  |                    | 43,301      |   |                    |   | 104,807     |  
|Non-Current                                      |  |                    |             |   |                    |   |             |  
|Inventories  ore in stockpiles (note 8)         |  |                    | 2,062       |   |                    |   | 2,156       |  
|Investments (note 9)                             |  |                    | 2,843       |   |                    |   | 522         |  
|Restricted cash and investments (note 10)        |  |                    | 2,254       |   |                    |   | 26,793      |  
|Property, plant and equipment (note 11)          |  |                    | 247,888     |   |                    |   | 367,370     |  
|Intangibles (note 12)                            |  |                    | 2,008       |   |                    |   | 2,838       |  
|                                                 |  |                    |             |   |                    |   |             |  
|Total assets                                     |  | $                  | 300,356     |   |                    | $ | 504,486     |  
|                                                 |  |                    |             |   |                    |   |             |  
|LIABILITIES                                      |  |                    |             |   |                    |   |             |  
|Current                                          |  |                    |             |   |                    |   |             |  
|Accounts payable and accrued liabilities         |  | $                  | 6,628       |   |                    | $ | 9,272       |  
|Current portion of long-term liabilities:        |  |                    |             |   |                    |   |             |  
|Deferred revenue                                 |  |                    |            |   |                    |   | 893         |  
|Post-employment benefits (note 13)               |  |                    | 402         |   |                    |   | 393         |  
|Reclamation obligations (note 14)                |  |                    | 848         |   |                    |   | 622         |  
|Debt obligations (note 15)                       |  |                    | 125         |   |                    |   | 111         |  
|                                                 |  |                    |             |   |                    |   |             |  
|                                                 |  |                    | 8,003       |   |                    |   | 11,291      |  
|Non-Current                                      |  |                    |             |   |                    |   |             |  
|Post-employment benefits (note 13)               |  |                    | 3,450       |   |                    |   | 3,498       |  
|Reclamation obligations (note 14)                |  |                    | 14,816      |   |                    |   | 20,954      |  
|Debt obligations (note 15)                       |  |                    | 104         |   |                    |   | 110         |  
|Other liabilities (note 16)                      |  |                    | 1,005       |   |                    |   | 1,082       |  
|Deferred income tax liability (note 17)          |  |                    | 9,449       |   |                    |   | 12,747      |  
|                                                 |  |                    |             |   |                    |   |             |  
|Total liabilities                                |  |                    | 36,827      |   |                    |   | 49,682      |  
|                                                 |  |                    |             |   |                    |   |             |  
|EQUITY                                           |  |                    |             |   |                    |   |             |  
|Share capital (note 18)                          |  |                    | 979,124     |   |                    |   | 974,312     |  
|Share purchase warrants (note 19)                |  |                    |            |   |                    |   |            |  
|Contributed surplus (note 20)                    |  |                    | 50,671      |   |                    |   | 49,171      |  
|Deficit                                          |  |                    | (777,039    | ) |                    |   | (579,696    | )
|Accumulated other comprehensive income (note 21) |  |                    | 10,773      |   |                    |   | 11,017      |  
|                                                 |  |                    |             |   |                    |   |             |  
|Total equity                                     |  |                    | 263,529     |   |                    |   | 454,804     |  
|                                                 |  |                    |             |   |                    |   |             |  
|Total liabilities and equity                     |  | $                  | 300,356     |   |                    | $ | 504,486     |  
|                                                 |  |                    |             |   |                    |   |             |  
|Issued and outstanding common shares (note 18)   |  |                    | 388,805,915 |   |                    |   | 384,660,915 |  
|                                                 |  |                    |             |   |                    |   |             |  
|Commitments and contingencies (note 26)          |  |                    |             |   |                    |   |             |  
|Subsequent events (note 27)                      |  |                    |             |   |                    |   |             |  

The accompanying notes are an integral part of the consolidated financial statements

On behalf of the Board of Directors:



|                                      |  |                                           
|------------------------------------- |  | ------------------------------------------
|Original signed by Ron F. Hochstein |  | Original signed by Catherine J.G. Stefan
|Director                              |  | Director                                  



- 1 -



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DENISON MINES CORP.

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Expressed in thousands
of U.S. dollars except for share and per share amounts)



|                                                                    |  |                 |          |   |                 |   |         |  
|------------------------------------------------------------------- |  | --------------- | -------- | - | --------------- | - | ------- | -
|                                                                    |  | Year Ended      |         
|                                                                    |  | December 312012 |          |   | December 312011 |  
|REVENUES(note 23)                                                   |  | $               | 11,127   |   |                 | $ | 25,796  |  
|                                                                    |  |                 |          |   |                 |   |         |  
|EXPENSES                                                            |  |                 |          |   |                 |   |         |  
|Operating expenses (note 22, 23)                                    |  |                 | (14,362  | ) |                 |   | (26,915 | )
|Mineral property exploration (note 23)                              |  |                 | (12,508  | ) |                 |   | (13,150 | )
|General and administrative (note 23)                                |  |                 | (10,475  | ) |                 |   | (9,901  | )
|Other income (expense) (note 22)                                    |  |                 | (2,676   | ) |                 |   | (1,904  | )
|                                                                    |  |                 |          |   |                 |   |         |  
|                                                                    |  |                 | (40,021  | ) |                 |   | (51,870 | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Income (loss) before finance charges                                |  |                 | (28,894  | ) |                 |   | (26,074 | )
|Finance income (expense) (note 22)                                  |  |                 | (450     | ) |                 |   | (108    | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Income (loss) before taxes                                          |  |                 | (29,344  | ) |                 |   | (26,182 | )
|Income tax recovery (expense) (note 17):                            |  |                 |          |   |                 |   |         |  
|Current                                                             |  |                 | 318      |   |                 |   | (31     | )
|Deferred                                                            |  |                 | 3,571    |   |                 |   | 1,661   |  
|                                                                    |  |                 |          |   |                 |   |         |  
|Net income (loss) from continuing operations                        |  |                 | (25,455  | ) |                 |   | (24,552 | )
|Net income (loss) from discontinued operations, net of tax (note 5) |  |                 | (92,493  | ) |                 |   | (46,317 | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Net income (loss) for the period                                    |  | $               | (117,948 | ) |                 | $ | (70,869 | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Comprehensive income (loss) from continuing operations:             |  |                 |          |   |                 |   |         |  
|Unrealized gain (loss) on investments-net of tax                    |  |                 | 80       |   |                 |   | (1,259  | )
|Foreign currency translation change                                 |  |                 | 4,973    |   |                 |   | (6,892  | )
|Comprehensive income (loss) from discontinued operations:           |  |                 |          |   |                 |   |         |  
|Unrealized gain (loss) on investments-net of tax                    |  |                 | (46      | ) |                 |   | (154    | )
|Foreign currency translation change                                 |  |                 | (5,251   | ) |                 |   | 255     |  
|                                                                    |  |                 |          |   |                 |   |         |  
|Comprehensive income (loss) for the period                          |  | $               | (118,192 | ) |                 | $ | (78,919 | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Net income (loss) per share from continuing operations:             |  |                 |          |   |                 |   |         |  
|Basic and diluted                                                   |  | $               | (0.07    | ) |                 | $ | (0.07   | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Net income (loss) per share from discontinued operations:           |  |                 |          |   |                 |   |         |  
|Basic and diluted                                                   |  | $               | (0.24    | ) |                 | $ | (0.12   | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Net income (loss) per share:                                        |  |                 |          |   |                 |   |         |  
|Basic and diluted                                                   |  | $               | (0.31    | ) |                 | $ | (0.19   | )
|                                                                    |  |                 |          |   |                 |   |         |  
|Weighted-average number of shares outstanding (in thousands):       |  |                 |          |   |                 |   |         |  
|Basic and diluted                                                   |  |                 | 385,352  |   |                 |   | 380,838 |  
|                                                                    |  |                 |          |   |                 |   |         |  

The accompanying notes are an integral part of the consolidated financial statements



- 2 -



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DENISON MINES CORP.

Consolidated Statements of Changes in Equity

(Expressed in thousands of U.S. dollars)



|                                                    |  |                 |          |   |                 |   |          |  
|--------------------------------------------------- |  | --------------- | -------- | - | --------------- | - | -------- | -
|                                                    |  | Year Ended      |         
|                                                    |  | December 312012 |          |   | December 312011 |  
|Share capital                                       |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  |                 | 974,312  |   |                 |   | 911,681  |  
|Share issues-net of issue costs                     |  |                 | 6,556    |   |                 |   | 62,114   |  
|Flow-through share premium                          |  |                 | (1,744   | ) |                 |   |         |  
|Employee share option exercises-cash                |  |                 |         |   |                 |   | 328      |  
|Employee share option exercisesnon-cash            |  |                 |         |   |                 |   | 189      |  
|                                                    |  |                 |          |   |                 |   |          |  
|Balanceend of period                               |  |                 | 979,124  |   |                 |   | 974,312  |  
|                                                    |  |                 |          |   |                 |   |          |  
|Share purchase warrants                             |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  |                 |         |   |                 |   | 5,830    |  
|Warrant expiries                                    |  |                 |         |   |                 |   | (5,830   | )
|                                                    |  |                 |          |   |                 |   |          |  
|Balanceend of period                               |  |                 |         |   |                 |   |         |  
|                                                    |  |                 |          |   |                 |   |          |  
|Contributed surplus                                 |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  |                 | 49,171   |   |                 |   | 41,658   |  
|Stock-based compensation expense                    |  |                 | 1,500    |   |                 |   | 3,333    |  
|Employee share option exercises-non-cash            |  |                 |         |   |                 |   | (189     | )
|Warrant expiries                                    |  |                 |         |   |                 |   | 5,830    |  
|Warrant expiriestax effect                         |  |                 |         |   |                 |   | (1,461   | )
|                                                    |  |                 |          |   |                 |   |          |  
|Balanceend of period                               |  |                 | 50,671   |   |                 |   | 49,171   |  
|                                                    |  |                 |          |   |                 |   |          |  
|Deficit                                             |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  |                 | (579,696 | ) |                 |   | (508,827 | )
|Non-cash distribution of assets (note 5)            |  |                 | (79,395  | ) |                 |   |         |  
|Net loss                                            |  |                 | (117,948 | ) |                 |   | (70,869  | )
|                                                    |  |                 |          |   |                 |   |          |  
|Balance-end of period                               |  |                 | (777,039 | ) |                 |   | (579,696 | )
|                                                    |  |                 |          |   |                 |   |          |  
|Accumulated other comprehensive income              |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  |                 | 11,017   |   |                 |   | 19,067   |  
|Unrealized gain (loss) on investments               |  |                 | 34       |   |                 |   | (1,413   | )
|Foreign currency translation                        |  |                 | 4,973    |   |                 |   | (6,637   | )
|Foreign currency translation realized in net income |  |                 | (5,251   | ) |                 |   |         |  
|                                                    |  |                 |          |   |                 |   |          |  
|Balanceend of period                               |  |                 | 10,773   |   |                 |   | 11,017   |  
|                                                    |  |                 |          |   |                 |   |          |  
|Total Equity                                        |  |                 |          |   |                 |   |          |  
|Balancebeginning of period                         |  | $               | 454,804  |   |                 | $ | 469,409  |  
|                                                    |  |                 |          |   |                 |   |          |  
|Balanceend of period                               |  | $               | 263,529  |   |                 | $ | 454,804  |  
|                                                    |  |                 |          |   |                 |   |          |  

The accompanying notes are an integral part of the consolidated financial statements



- 3 -



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DENISON MINES CORP.

Consolidated Statements of Cash Flow

(Expressed in thousands of U.S. dollars)



|                                                                     |  |                 |          |   |                 |   |         |  
|-------------------------------------------------------------------- |  | --------------- | -------- | - | --------------- | - | ------- | -
|                                                                     |  | Year Ended      |         
|CASH PROVIDED BY (USED IN):                                          |  | December 312012 |          |   | December 312011 |  
|OPERATING ACTIVITIES                                                 |  |                 |          |   |                 |   |         |  
|Net loss for the period                                              |  | $               | (117,948 | ) |                 | $ | (70,869 | )
|Items not affecting cash:                                            |  |                 |          |   |                 |   |         |  
|Depletion, depreciation, amortization and accretion                  |  |                 | 19,261   |   |                 |   | 39,979  |  
|Impairment  goodwill (note 5)                                       |  |                 |         |   |                 |   | 32,625  |  
|Impairment  mineral properties (note 5)                             |  |                 | 54,471   |   |                 |   |        |  
|Impairment  plant and equipment (note 5)                            |  |                 | 43,473   |   |                 |   |        |  
|Impairment  investments                                             |  |                 | 64       |   |                 |   | 896     |  
|Stock-based compensation                                             |  |                 | 1,500    |   |                 |   | 3,333   |  
|Losses (gains) on asset disposals                                    |  |                 | (65      | ) |                 |   | 191     |  
|Losses (gains) on investments and restricted investments             |  |                 | (455     | ) |                 |   | (401    | )
|Non-cash inventory adjustments                                       |  |                 | (34      | ) |                 |   | 373     |  
|Deferred income tax expense (recovery)                               |  |                 | (3,571   | ) |                 |   | (1,096  | )
|Foreign exchange                                                     |  |                 | (2,724   | ) |                 |   | 1,390   |  
|Change in non-cash working capital items (note 22)                   |  |                 | (741     | ) |                 |   | (26,404 | )
|                                                                     |  |                 |          |   |                 |   |         |  
|Net cash provided by (used in) operating activities                  |  |                 | (6,769   | ) |                 |   | (19,983 | )
|                                                                     |  |                 |          |   |                 |   |         |  
|INVESTING ACTIVITIES                                                 |  |                 |          |   |                 |   |         |  
|Acquisition of a business, net of cash equivalents acquired (note 5) |  |                 |         |   |                 |   | (59,704 | )
|Divestiture of a business, cash divested (note 5)                    |  |                 | (552     | ) |                 |   |        |  
|Decrease (increase) in notes receivable                              |  |                 | (284     | ) |                 |   | 803     |  
|Purchase of investments                                              |  |                 | (1,816   | ) |                 |   |        |  
|Expenditures on property, plant and equipment                        |  |                 | (13,122  | ) |                 |   | (24,274 | )
|Proceeds on sale of property, plant and equipment                    |  |                 | 104      |   |                 |   | 780     |  
|Decrease (increase) in restricted cash and investments               |  |                 | (373     | ) |                 |   | (3,349  | )
|                                                                     |  |                 |          |   |                 |   |         |  
|Net cash provided by (used in) investing activities                  |  |                 | (16,043  | ) |                 |   | (85,744 | )
|                                                                     |  |                 |          |   |                 |   |         |  
|FINANCING ACTIVITIES                                                 |  |                 |          |   |                 |   |         |  
|Increase (decrease) in debt obligations                              |  |                 | 4        |   |                 |   | (181    | )
|Issuance of common shares for:                                       |  |                 |          |   |                 |   |         |  
|New share issues (note 18)                                           |  |                 | 6,556    |   |                 |   | 62,114  |  
|Exercise of stock options (note 18)                                  |  |                 |         |   |                 |   | 328     |  
|                                                                     |  |                 |          |   |                 |   |         |  
|Net cash provided by (used in) financing activities                  |  |                 | 6,560    |   |                 |   | 62,261  |  
|                                                                     |  |                 |          |   |                 |   |         |  
|Increase (decrease) in cash and cash equivalents                     |  |                 | (16,252  | ) |                 |   | (43,466 | )
|Foreign exchange effect on cash and cash equivalents                 |  |                 | 925      |   |                 |   | (573    | )
|Cash and cash equivalents, beginning of period                       |  |                 | 53,515   |   |                 |   | 97,554  |  
|                                                                     |  |                 |          |   |                 |   |         |  
|Cash and cash equivalents, end of period                             |  | $               | 38,188   |   |                 | $ | 53,515  |  
|                                                                     |  |                 |          |   |                 |   |         |  
|Supplemental cash flow disclosure:                                   |  |                 |          |   |                 |   |         |  
|Interest paid                                                        |  | $               | 7        |   |                 | $ | 82      |  
|Income taxes paid (recovered)                                        |  |                 | (348     | ) |                 |   | 80      |  
|                                                                     |  |                 |          |   |                 |   |         |  

The accompanying notes are an integral part of the consolidated financial statements



- 4 -



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DENISON MINES CORP.

Notes to the consolidated financial statements for the years ended December 31, 2012 and 2011

(Expressed in U.S. dollars except for shares and per share amounts)



|1. | NATURE OF OPERATIONS
|-- | --------------------

Denison Mines Corp. and its subsidiary companies and joint arrangements (collectively, the Company) are engaged in uranium
mining and related activities, including acquisition, exploration and development of uranium bearing properties, extraction, processing and selling of uranium.

The Company has a 22.5% interest in the McClean Lake mill, located in the Athabasca Basin of Saskatchewan, Canada and varying ownership interests in a number of development and exploration projects
located in Canada, Mongolia and Zambia. Through its environmental services division, the Company provides mine decommissioning and decommissioned site monitoring services to third parties.

The Company is also the manager of Uranium Participation Corporation (UPC), a publicly-listed company
formed to invest substantially all of its assets in uranium oxide concentrates (U3O8) and
uranium hexafluoride (UF6). The Company has no
ownership interest in UPC but receives various fees for management services and commissions from the purchase and sale of
U3O8and UF6by UPC.

Denison Mines Corp. (DMC) is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its registered head office is 595 Bay Street, Suite 402,
Toronto, Ontario, Canada, M5G 2C2.

References to 2012 and 2011 refer to the year ended
December 31, 2012 and the year ended December 31, 2011 respectively.



|2. | BASIS OF PRESENTATION AND RESTATEMENT OF COMPARATIVE NUMBERS
|-- | ------------------------------------------------------------

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB).

The Companys presentation currency is U.S dollars.

These financial statements were approved by the board of directors for issue on March 7, 2013.

On June 29, 2012, the Company completed a transaction with Energy Fuels Inc. (EFR) to sell all of its mining assets and
operations located in the United States and, in conjunction with the sale, reorganize the Companys share capital (see note 5). In accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the Company has
restated the presentation of its statement of comprehensive income (loss) to include only the Companys continuing operations in the line item detail of the statement and to disclose the results of its U.S. Mining Division, net of tax, as a
single line item amount. Note disclosure relating to the statement of comprehensive income (loss) has also been restated.



|3. | SIGNIFICANT ACCOUNTING POLICIES
|-- | -------------------------------

The significant accounting policies used in the preparation of these consolidated financial statements are described below:



| | (a) | Consolidation
| | --- | -------------

The
financial statements of the Company consolidate the accounts of DMC and its subsidiaries. Subsidiaries are those entities which DMC controls by having the power to govern the financial and operating policies. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether DMC controls another entity. Subsidiaries are fully consolidated from the date on which control is obtained by DMC and are de-consolidated from the
date that control ceases. Intercompany transactions, balances and unrealized gains and losses from intercompany transactions are eliminated.



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Non-controlling interests represent equity interests in subsidiaries owned by outside
parties. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of net income and comprehensive income is recognized directly in equity. Changes in the parent
companys ownership interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions.

The Company has various interests in development and exploration projects which are held through option or joint agreements. These have been classified as joint ownership interests under IFRS. These joint
ownership interests have been accounted for using the undivided interest method.



| | (b) | Foreign currency translation
| | --- | ----------------------------



| | (i) | Functional and presentation currency
| | --- | ------------------------------------

Items included in the financial statements of each entity in the DMC group are measured using the currency of the primary economic environment in which the entity operates (the functional
currency). Primary and secondary indicators are used to determine the functional currency (primary indicators have priority over secondary indicators). Primary indicators include the currency that mainly influences sales prices and the
currency that mainly influences labour, material and other costs. Secondary indicators include the currency in which funds from financing activities are generated and the currency in which receipts from operating activities are usually retained. For
our Canadian, Zambian and Mongolian entities, the local currency has been determined to be the functional currency.

The
consolidated financial statements are presented in U.S. dollars, unless otherwise stated.

The financial statements of
entities that have a functional currency different from the presentation currency of DMC (foreign operations) are translated into U.S. dollars as follows: assets and liabilities  at the closing rate at the date of the statement of
financial position, and income and expenses  at the average rate of the period (as this is considered a reasonable approximation to actual rates). All resulting changes are recognized in other comprehensive incomes as cumulative translation
adjustments.

When an entity disposes of its entire interest in a foreign operation, or loses control, joint control, or
significant influence over a foreign operation, the foreign currency gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If an entity disposes of part of an interest in another
entity which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.



| | (ii) | Transactions and balances
| | ---- | -------------------------

Foreign currency transactions are translated into an entitys functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an
operations functional currency are recognized in the statement of income.



| | (c) | Business combinations
| | --- | ---------------------

A
business combination is defined as an acquisition of assets and liabilities that constitute a business. A business consists of inputs, including non-current assets, and processes, including operational processes, that when applied to those inputs,
have the ability to create outputs that provide a return to the Company and its shareholders. A business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs, but can be
integrated with the inputs and processes of the Company to create outputs.

Business combinations are accounted for using the
acquisition method whereby identifiable assets acquired and liabilities assumed, including contingent liabilities, are recorded at 100% of their acquisition-date fair values. The acquisition date is the date the Company acquires control over the
acquiree. The Company considers all relevant facts and circumstances in determining the acquisition date.

Acquisition related
costs, other than costs to issue debt or equity securities of the acquirer, including investment banking fees, legal fees, accounting fees, valuation fees and other professional or consulting fees are expensed as incurred.



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If the initial accounting for a business combination is incomplete by the end of the
reporting period in which the combination occurs, the Company reports in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the Company will retrospectively adjust the
provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that
date. The maximum length of time for the measurement period is one year from the acquisition date.



| | (d) | Cash and cash equivalents
| | --- | -------------------------

Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid investments with original
maturities of three months or less which are subject to an insignificant risk of changes in value.



| | (e) | Financial instruments
| | --- | ---------------------

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial
instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Financial liabilities are
derecognized when the obligations specified in the contract is discharged, cancelled or expires.

At initial recognition, the
Company classifies its financial instruments in the following categories:



| | (i) | Financial assets and liabilities at fair value through profit or loss (FVPL)
| | --- | ------------------------------------------------------------------------------

A financial asset or liability is classified in this category if acquired principally for the purpose of selling or repurchasing in the
short-term. Financial instruments in this category are recognized initially and subsequently at fair value. Transaction costs are expensed in the consolidated statement of income. Gains and losses arising from changes in fair value are presented in
the consolidated statement of income in the period in which they arise.



| | (ii) | Available-for-sale investments
| | ---- | ------------------------------

Available-for-sale investments are recognized initially at fair value plus transaction costs and are subsequently carried at fair value.
Gains or losses arising from re-measurement are recognized in other comprehensive income. When an available-for-sale investment is sold or impaired, the accumulated gains or losses are moved from accumulated other comprehensive income to the
statement of income.



| | (iii) | Held-to-maturity investments
| | ----- | ----------------------------

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that are
intended to be held to maturity. Held-to-maturity investments are initially recognized at fair value plus transaction costs and subsequently measured at amortized cost using the effective interest method less a provision for impairment.



| | (iv) | Loans and receivables
| | ---- | ---------------------

Loans
and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are initially recognized at the amount expected to be received, less a discount (when material) to
reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost using the effective interest method less a provision for impairment.



| | (v) | Financial liabilities at amortized cost
| | --- | ---------------------------------------

Financial liabilities are initially recognized at the amount required to be paid, less a discount (when material) to reduce the financial liabilities to fair value. Subsequently, financial liabilities are
measured at amortized cost using the effective interest method.

The Company has designated its financial assets and
liabilities as follows: i) a portion of Restricted cash and investments are classified as FVPL and any period change in fair value is recorded in net income through other income (expense). The remaining amount is classified as
held-to-maturity investments; ii) Cash and cash equivalents and Trade and other receivables are classified as loans and receivables and are measured at amortized cost using the effective interest rate method. Interest income
is recorded in net income through finance income (expense), as applicable; iii) a portion of Investments are classified as FVPL and any period change in fair value is recorded in net income through other income (expense). The remaining
amount is classified as available-for-sale and any period change in fair value is recorded in other comprehensive income. When the investments value becomes impaired, the loss is recognized in net income through other income (expense) in the
period of impairment; and iv) Accounts payable and accrued liabilities and Debt obligations are classified as other financial liabilities and are measured at amortized cost using the effective interest rate method. Interest
expense is recorded in net income through finance income (expense), as applicable.



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| | (f) | Impairment of financial assets
| | --- | ------------------------------

At each reporting date, the Company assesses whether there is objective evidence that a financial asset (other than a financial asset classified as fair value through profit and loss) is impaired.
Objective evidence of an impairment loss includes: i) significant financial difficulty of the debtor; ii) delinquencies in interest or principal payments; iii) increased probability that the borrower will enter bankruptcy or other financial
reorganization; and (iv) in the case of equity investments, a significant or prolonged decline in the fair value of the security below its cost.

If such evidence exists, the Company recognizes an impairment loss, as follows:



| | (i) | Financial assets carried at amortized cost: The loss is the difference between the amortized cost of the loan or receivable and the present value of the estimated
future cash flows, discounted using the instruments original effective interest rate. The carrying amount of the asset is reduced by this amount either directly or indirectly through the use of an allowance account.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | Available-for-sale financial assets: The impairment loss is the difference between the original cost of the asset and its fair value at the measurement date, less any
impairment losses previously recognized in the statement of income. This amount represents the cumulative loss in accumulated other comprehensive income that is reclassified to net income.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (g) | Inventories
| | --- | -----------

Expenditures, including depreciation, depletion and amortization of production assets, incurred in the mining and processing activities
that will result in the future concentrate production are deferred and accumulated as ore in stockpiles and in-process and concentrate inventories. These amounts are carried at the lower of average costs or net realizable value (NRV).
NRV is the difference between the estimated future concentrate price (net of selling costs) and estimated costs to complete production into a saleable form.

Stockpiles are comprised of coarse ore that has been extracted from the mine and is available for further processing. Mining production costs are added to the stockpile as incurred and removed from the
stockpile based upon the average cost per tonne of ore produced from mines considered to be in commercial production. The current portion of ore in stockpiles represents the amount expected to be processed in the next twelve months.

In-process and concentrate inventories include the cost of the ore removed from the stockpile, a pro-rata share of the amortization of the
associated mineral property, as well as production costs incurred to process the ore into a saleable product. Processing costs typically include labor, chemical reagents and directly attributable mill overhead expenditures. Items are valued
according to the first-in first-out method (FIFO) or at weighted average cost, depending on the type of inventory or work-in-process.

Materials and other supplies held for use in the production of inventories are carried at average cost and are not written down below that cost if the finished products in which they will be incorporated
are expected to be sold at or above cost. However, when a decline in the price of concentrates indicates that the cost of the finished products exceeds net realizable value, the materials are written down to net realizable value. In such
circumstances, the replacement cost of the materials may be the best available measure of their net realizable value.



| | (h) | Property, plant and equipment
| | --- | -----------------------------

Property, plant and equipment are recorded at acquisition or production cost and carried net of depreciation and impairments. Cost includes expenditures that are directly attributable to the acquisition
of the asset. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost
can be measured reliably. The carrying amount of a replaced asset is derecognized when replaced. Repairs and maintenance costs are charged to the statement of income during the period in which they are incurred.



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Depreciation is calculated on a straight line or unit of production basis as appropriate.
Where a straight line methodology is used, the assets are depreciated to their estimated residual value over an estimated useful life which ranges from three to twenty years depending upon the asset type. Where a unit of production methodology is
used, the assets are depreciated to their estimated residual value over the useful life defined by managements best estimate of recoverable reserves and resources in the current mine plan. When assets are retired or sold, the resulting gains
or losses are reflected in current earnings as a component of other income or expense. The Company allocates the amount initially recognized in respect of an item of property, plant and equipment to its significant parts and depreciates separately
each such part. Residual values, method of depreciation and useful lives of the assets are reviewed at least annually and adjusted if appropriate.

Where straight-line depreciation is utilized, the range of useful lives for various asset classes is generally as follows:



|                                   |  |  |                | 
|---------------------------------- |  |  | -------------- | 
|Buildings                          |  |  | 15 - 20 years; | 
|Production machinery and equipment |  |  | 5 - 7 years;   | 
|Other                              |  |  | 3 - 5 years;   | 



| | (i) | Mineral property acquisition, exploration and development costs
| | --- | ---------------------------------------------------------------

Costs relating to the acquisition of acquired mineral rights and acquired exploration rights are capitalized.

Exploration and evaluation expenditures are expensed as incurred on mineral properties not sufficiently advanced. At the point in time that a mineral property is considered to be sufficiently advanced, it
is classified as a development mineral property and all further expenditures for the current year and subsequent years are capitalized as incurred. These costs will include costs of maintaining the site until commercial production, costs to
initially delineate the ore body, costs for shaft sinking and access, lateral development, drift development and infrastructure development. Such costs represent the net expenditures incurred and capitalized as at the balance sheet date and do not
necessarily reflect present or future values.

Once a development mineral property goes into commercial production, the
property is classified as Producing and the accumulated costs are amortized over the estimated recoverable resources in the current mine plan using a unit of production basis. Commercial production occurs when a property is substantially
complete and ready for its intended use.



| | (j) | Intangible assets
| | --- | -----------------



| | (i) | Identifiable intangible assets
| | --- | ------------------------------

The Companys identifiable intangible assets are stated at cost less accumulated amortization. These assets are capitalized and
amortized on a straight-line basis in the statement of income over the period of their expected useful lives. The useful lives of the assets are reviewed at least annually and adjusted if appropriate.



| | (ii) | Goodwill
| | ---- | --------

Goodwill represents
the excess of the cost of an acquisition over the fair value of the Companys share of the identifiable net assets of the acquired subsidiary at the date of acquisition. Goodwill is carried at cost less accumulated impairment losses. Impairment
losses are recognized in the statement of income when recognized. Goodwill is allocated to each cash generating unit (CGU) or group of CGUs that are expected to benefit from the related business combination. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.



| | (k) | Impairment of non-financial assets
| | --- | ----------------------------------

Property, plant and equipment and intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. For the purpose of measuring
recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows or CGUs. The recoverable amount is the higher of an assets fair value less costs to sell and value in use (being the present
value of the expected future cash flows of the relevant asset or CGU, as determined by management). An impairment loss is recognized for the amount by which the CGUs carrying amount exceeds its recoverable amount.

Goodwill, if any, is reviewed for impairment annually or at any time if an indicator of impairment exists.



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| | (l) | Employee benefits
| | --- | -----------------



| | (i) | Post-employment benefit obligations
| | --- | -----------------------------------

The Company assumed the obligation of a predecessor company to provide life insurance, supplemental health care and dental benefits, excluding pensions, to its former Canadian employees who retired from
active service prior to 1997. The estimated cost of providing these benefits was actuarially determined using the projected benefits method and is recorded on the balance sheet at its estimated present value. The interest cost on this unfunded
liability is being accreted over the remaining lives of this retiree group. Unamortized experience gains and losses are being amortized on a straight-line basis over the average life expectancy remaining of this retiree group.



| | (ii) | Stock-based compensation
| | ---- | ------------------------

The
Company uses a fair value-based method of accounting for stock options to employees and to non-employees. The fair value is determined using the Black-Scholes option pricing model on the date of the grant. The cost is recognized on a graded method
basis, adjusted for expected forfeitures, over the applicable vesting period as an increase in stock-based compensation expense and the contributed surplus account. When such stock options are exercised, the proceeds received by the Company,
together with the respective amount from contributed surplus, are credited to share capital.



| | (iii) | Termination benefits
| | ----- | --------------------

The
Company recognizes termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing benefits as a result of an offer
made to encourage voluntary termination. Benefits falling due more than twelve months after the end of the reporting period are discounted to their present value.



| | (m) | Reclamation provisions
| | --- | ----------------------

Reclamation provisions, any legal and constructive obligation related to the retirement of tangible long-lived assets, are recognized when
such obligations are incurred, if a reasonable estimate of the value can be determined. These obligations are measured initially at the present value of expected cash flows using a pre-tax discount rate reflecting risks specific to the liability and
the resulting costs are capitalized and added to the carrying value of the related assets. In subsequent periods, the liability is adjusted for the accretion of the discount and the expense is recorded in the income statement. Changes in the amount
or timing of the underlying future cash flows or changes in the discount rate are immediately recognized as an increase or decrease in the carrying amounts of the related assets and liability. These costs are amortized to the results of operations
over the life of the asset. Reductions in the amount of the liability are first applied against the amount of the net reclamation asset on the books with any excess value being recorded in the statement of operations.

The Companys activities are subject to numerous governmental laws and regulations. Estimates of future reclamation liabilities for
asset decommissioning and site restoration are recognized in the period when such liabilities are incurred. These estimates are updated on a periodic basis and are subject to changing laws, regulatory requirements, changing technology and other
factors which will be recognized when appropriate. Liabilities related to site restoration include long-term treatment and monitoring costs and incorporate total expected costs net of recoveries. Expenditures incurred to dismantle facilities,
restore and monitor closed resource properties are charged against the related reclamation and remediation liability.



| | (n) | Provisions
| | --- | ----------

Provisions
for restructuring costs and legal claims, where applicable, are recognized in liabilities when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation, and the amount can be reliably estimated. Provisions are measured at managements best estimate of the expenditure required to settle the obligation at the end of the reporting period, and are discounted to present value
where the effect is material. The Company performs evaluations to identify onerous contracts and, where applicable, records provisions for such contracts.



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| | (o) | Current and Deferred Income tax
| | --- | -------------------------------

Income taxes are accounted for using the liability method of accounting for deferred income taxes. Under this method, the tax currently payable is based on taxable income for the period. Taxable income
differs from income as reported in the consolidated statement of income (loss) because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The
Companys liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax assets and liabilities are recognized based on temporary differences between the financial statement carrying values of the existing assets and liabilities and their respective income
tax bases used in the computation of taxable income. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable income will be
available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other
assets and liabilities in a transaction that affects neither the taxable income nor the accounting income. Deferred tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries and investments, and
interests in joint ventures, except where the Company is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets are recognized to
the extent that taxable income will be available against which the deductible temporary differences can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Deferred tax is
calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is
charged or credited to income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also recorded within equity.

Income tax assets and liabilities are offset when there is a legally enforceable right to offset the assets and liabilities and when they relate to income taxes levied by the same tax authority on either
the same taxable entity or different taxable entities where there is an intention to settle the balance on a net basis.



| | (p) | Flow-Through Common Shares
| | --- | --------------------------

The Companys Canadian exploration activities have been financed in part through the issuance of flow-through common shares whereby
the tax benefits of the eligible exploration expenditures incurred under this arrangement are renounced to the subscribers. The proceeds from issuing flow-through shares are allocated between the offering of shares and the sale of tax benefits. The
allocation is based on the difference (premium) between the quoted price of the Companys existing shares and the amount the investor pays for the actual flow-through shares. A liability is recognized for the premium, and is
extinguished when the tax effect of the temporary differences, resulting from the renunciation, is recorded  with the difference between the liability and the value of the tax assets renounced being recorded as a deferred tax expense. The tax
effect of the renunciation is recorded at the time the Company makes the renunciation  which may differ from the effective date of renunciation. If the flow-through shares are not issued at a premium, a liability is not established, and on
renunciation the full value of the tax assets renounced is recorded as a deferred tax expense.



| | (q) | Revenue recognition
| | --- | -------------------

Revenue from the sale of mineral concentrates is recognized when it is probable that the economic benefits will flow to the Company. This
is generally the case once delivery has occurred, the sales price and costs incurred with respect to the transaction can be measured reliably and collectability is reasonably assured. For uranium, revenue is typically recognized when delivery is
evidenced by book transfer at the applicable uranium storage facility.

Revenue from toll milling services is recognized as
material is processed in accordance with the specifics of the applicable toll milling agreement. Revenue and unbilled accounts receivable are recorded as related costs are incurred using billing formulas included in the applicable toll milling
agreement.

Revenue on environmental service contracts is recognized using the percentage of completion method, whereby sales,
earnings and unbilled accounts receivable are recorded as related costs are incurred. Earnings rates are adjusted periodically as a result of revisions to projected contract revenues and estimated costs of completion. Losses, if any, are recognized
fully when first anticipated. Revenues from engineering services are recognized as the services are provided in accordance with customer agreements.

Management fees from UPC are recognized as management services are provided under the contract on a monthly basis. Commission revenue earned on acquisition or sale of U3O8and UF6on behalf of UPC (or other parties where Denison acts as an agent) is recognized on the date when title passes.



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| | (r) | Borrowing costs
| | --- | ---------------

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets,
until such time as the assets are substantially ready for their intended use. All other borrowing costs are recognized as interest expense in the statement of income in the period in which they are incurred.



| | (s) | Earnings (loss) per share
| | --- | -------------------------

Basic earnings per share (EPS) is calculated by dividing the net income (loss) for the period attributable to equity owners of
DMC by the weighted average number of common shares outstanding during the period.

Diluted EPS is calculated by adjusting the
weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect to options, warrants and similar instruments is computed using the treasury stock method. DMCs potentially dilutive
common shares consist of outstanding stock options granted.



| | (t) | Accounting standards issued but not yet applied
| | --- | -----------------------------------------------

Several pronouncements have been issued by the IASB or International Financial Reporting Interpretations Committee (IFRIC) that are not yet effective for the year ended December 31, 2012
but will be for accounting periods beginning on or after January 1, 2013. Those that are applicable to the Company are listed below:

Pronouncements effective for fiscal periods of the Company beginning on or after January 1, 2014:

International Financial Reporting Standard 9, Financial Instruments (IFRS 9)

IFRS 9 was issued in November 2009 and contained requirements for financial assets. This standard addresses classification and measurement of financial assets and replaces the multiple category and
measurement models in IAS 39 for debt instruments with a new mixed measurement model having only two categories: amortized cost and fair value through profit or loss. IFRS 9 also replaces the models for measuring equity instruments, and such
instruments are either recognized at fair value through profit or loss or at fair value through other comprehensive income. Where such equity instruments are measured at fair value through other comprehensive income, dividends are recognized in
profit or loss to the extent not clearly representing a return of investment; however, other gains and losses (including impairments) associated with such instruments remain in accumulated comprehensive income indefinitely.

Requirements for financial liabilities were added in October 2010 and they largely carried forward existing requirements in IAS 39,
Financial Instruments  Recognition and Measurement, except that fair value changes due to credit risk for liabilities designated at fair value through profit and loss would generally be recorded in other comprehensive income.

This standard is required to be applied for accounting periods beginning on or after January 1, 2015, with earlier adoption
permitted. The Company has not evaluated the impact of adopting this standard.

Pronouncements effective for fiscal periods of
the Company beginning on or after January 1, 2013:

International Financial Reporting Standard 10, Consolidated
Financial Statements (IFRS 10)

IFRS 10 was issued in May 2011 and it establishes principles for the
presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so
as to obtain benefits from its activities. IFRS 10 replaces the consolidation requirements in SIC-12 ConsolidationSpecial Purpose Entities and IAS 27 Consolidated and Separate Financial Statements.

International Financial Reporting Standard 11, Joint Arrangements (IFRS 11)

IFRS 11 was issued in May 2011 and it provides for a more realistic reflection of joint arrangements by focusing on the rights and
obligations of the arrangement, rather than its legal form. IFRS 11 requires the venture to classify its interest in a joint arrangement as a joint venture or a joint operation. Joint ventures will be accounted for using the equity method of
accounting whereas for a joint operation the venture will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for
interests in joint ventures. The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities. IFRS 11 supersedes IAS 31 Interests in Joint
Ventures and SIC-13 Jointly Controlled EntitiesNon-Monetary Contributions by Ventures.



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International Financial Reporting Standard 12, Disclosure of Interest in Other Entities
(IFRS 12)

IFRS 12 was issued in May 2011 and it is a new and comprehensive standard on disclosure
requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. The standard carries forward existing disclosures and also introduces significant additional
disclosure requirements that address the nature of, and risks associated with, an entitys interest in other entities.

International Financial Reporting Standard 13, Fair Value Measurement (IFRS 13)

IFRS 13 was issued in May 2011 and it establishes new guidance on fair value measurement and disclosure requirements for IFRS and
completes a major project to improve the convergence of IFRS and US GAAP. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market
participants, at the measurement date.

International Accounting Standard 1, Presentation of Financial Statements
(IAS 1)

IAS 1 was amended to require entities to group items within other comprehensive income based on an
assessment of whether such items may or may not be reclassified to profit or loss at a subsequent date.

International
Accounting Standard 19, Post-Employment Benefits (IAS 19)

IAS 19 was amended to eliminate an entitys
option to defer the recognition of certain gains and losses related to post-employment benefits and require re-measurement of associated assets and liabilities in other comprehensive income.

The Company has conducted a preliminary review of the pronouncements effective for the Companys fiscal period beginning
January 1, 2013. Apart from additional disclosure required by IFRS12 and an immaterial change in the accounting for the Companys post-employment benefits required by IAS19, the Company does not expect the adoption of these standards, as
described above, to have a material impact on the Companys financial statements.



|4. | CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
|-- | --------------------------------------------

The preparation of consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates and judgements that affect the amounts reported. It also requires
management to exercise judgement in applying the Companys accounting policies. These judgements and estimates are based on managements best knowledge of the relevant facts and circumstances taking into account previous experience.
Although the Company regularly reviews the estimates and judgements made that affect these financial statements, actual results may be materially different.

Significant estimates and judgements made by management relate to:



| | (a) | Depreciation and Amortization of Property, Plant and Equipment
| | --- | --------------------------------------------------------------

Property, plant and equipment comprise a large component of the Companys assets and, as such, the depreciation and amortization of those assets have a significant effect on the Companys
financial statements. Depreciation and amortization of property, plant and equipment used in production is calculated on a straight line basis or a unit of production basis as appropriate.

Plant and equipment assets depreciated using a straight-line basis require estimates of residual values and allocate the cost of an asset
to production cost evenly over the assets useful life defined as a period of time. Plant and equipment assets depreciated using a units of production basis require estimates of residual values and allocate the cost of an asset to production cost
based on current period production in proportion to total anticipated production from the facility. In certain instances, the total anticipated production from a facility will require making estimates about future toll milling volumes.



- 13 -



---

Mineral property assets are amortized using a units of production basis that allocates the
cost of the asset to production cost based on the current periods mill feed as a proportion of the total estimated resources in the related ore body. The process of making these estimates requires significant judgment in evaluating and
assessing available geological, geophysical, engineering and economic data, projected rates of production, estimated commodity price forecasts and the timing of future expenditures, all of which are, by their very nature, subject to interpretation
and uncertainty.

Changes in these estimates may materially impact the carrying value of the Companys property, plant and
equipment and the recorded amount of depletion and depreciation.



| | (b) | Valuation of Mineral Properties
| | --- | -------------------------------

The Company undertakes a review of the carrying values of mineral properties and related expenditures whenever events or changes in circumstances indicate that their carrying values may exceed their
estimated net recoverable amounts determined by reference to estimated future operating results, discounted net cash flows and current market valuations of similar properties. An impairment loss is recognized when the carrying value of those assets
is not recoverable. In undertaking this review, management of the Company is required to make significant estimates of, amongst other things: reserve and resource amounts, future production and sale volumes, forecast commodity prices, future
operating, capital and reclamation costs to the end of the mines life and current market valuations from observable market data. These estimates are subject to various risks and uncertainties, which may ultimately have an effect on the
expected recoverability of the carrying values of the mineral properties and related expenditures. Changes in these estimates could have a material impact on the carrying value of the mineral property amounts.



| | (c) | Deferred Tax Assets and Liabilities
| | --- | -----------------------------------

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply when the differences are expected to be recovered or settled. The determination of the ability of the Company
to utilize tax loss carry forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company. Management is required to assess whether it is
probable that the Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions, commodity prices and other factors could result in revisions to the estimates of the benefits to be realized or
the timing of utilizing the losses.



| | (d) | Reclamation Obligations
| | --- | -----------------------

Asset retirement obligations are recorded as a liability when the asset is initially constructed. Denison has accrued its best estimate of
the ongoing reclamation liability in connection with the decommissioned Elliot Lake mine site and is currently accruing its best estimate of its share of the cost to decommission its other mining and milling properties in accordance with existing
laws, contracts and other policies. The estimate of future costs involves a number of estimates relating to timing, type of costs, mine closure plans, and review of potential methods and technical advancements. Furthermore, due to uncertainties
concerning environmental remediation, the ultimate cost of the Companys decommissioning liability could differ from amounts provided. The estimate of the Companys obligation is subject to change due to amendments to applicable laws and
regulations and as new information concerning the Companys operations becomes available. The Company is not able to determine the impact on its financial position, if any, of environmental laws and regulations that may be enacted in the
future.



|5. | ACQUISITIONS AND DIVESTITURES
|-- | -----------------------------

U.S. Mining Division Transaction and Denison Capital Reorganization

On
June 29, 2012, the Company completed its transaction with EFR to sell all of its mining assets and operations located in the United States (the U.S. Mining Division) in exchange for consideration equal to 425,440,872 common shares
of EFR (the EFR Share Consideration). Immediately following the closing of the sale transaction, Denison completed the remaining steps in the Plan of Arrangement (the Denison Arrangement) to reorganize its capital and
distribute the EFR Share Consideration to Denison shareholders on a pro rata basis as a return of capital.

In accordance with
the requirements of International Financial Reporting Interpretation Committee 17, Distribution of Non-Cash Assets to Owners (IFRIC 17), the Company was required to fair value the U.S Mining Division assets being distributed to
shareholders in the form of the EFR Share Consideration.



- 14 -



---

Immediately prior to the sale, the Company tested the U.S. Mining Division for impairment
using the fair value of the EFR Share Consideration as the recoverable amount. The recoverable amount was determined to be $79,395,000 based on 425,440,872 common shares of EFR to be distributed to the Companys shareholders, a share price of
CAD$0.19 per share and a CAD$ to USD$ foreign exchange rate of 0.9822.

In performing the impairment test, the Company
concluded that the recoverable amount of the U.S. Mining Division was lower than the carrying value. As a result, the Company has recognized an impairment loss of $97,944,000 in the six month period ended June 30, 2012 which has been allocated
on a pro rata basis between plant and equipment and mineral property assets in the U.S. Mining Divisions results.

The
details of the net assets of the U.S. Mining Division sold to EFR on June 29, 2012 are as follows:



|                                                |  |   |             | 
|----------------------------------------------- |  | - | ----------- | 
|(in thousands, except share amounts)            |  |   |            
|EFR Share Consideration at fair value:          |  |   |             | 
|Number of EFR shares received                   |  |   | 425,440,872 | 
|June 29, 2012 EFR share price on TSX            |  |   | CAD$0.19    | 
|June 29, 2012 CAD$ to USD$ FX rate              |  |   | 0.9822      | 
|                                                |  |   |             | 
|EFR Share Consideration at fair value           |  | $ | 79,395      | 
|                                                |  |   |             | 
|Net assets disposed of at carrying value:       |  |   |             | 
|Cash                                            |  | $ | 552         | 
|Trade and other receivables                     |  |   | 926         | 
|Inventories                                     |  |   |             | 
|Ore-in-stockpiles                               |  |   | 25,200      | 
|Mineral concentrates and work-in-progress       |  |   | 8,807       | 
|Mine and mill supplies                          |  |   | 3,758       | 
|Prepaid expenses and other                      |  |   | 471         | 
|Restricted cash and investments                 |  |   | 24,894      | 
|Property, plant and equipment                   |  |   |             | 
|Plant and equipment, net of impairment          |  |   | 14,611      | 
|Mineral properties, net of impairment           |  |   | 16,466      | 
|                                                |  |   |             | 
|Total assets                                    |  |   | 95,685      | 
|                                                |  |   |             | 
|Accounts payable and accrued liabilities        |  |   | 7,704       | 
|Deferred revenue                                |  |   | 1,150       | 
|Reclamation obligations                         |  |   | 7,336       | 
|Other liabilities                               |  |   | 100         | 
|                                                |  |   |             | 
|Total liabilities                               |  |   | 16,290      | 
|                                                |  |   |             | 
|Net assets disposed of at carrying value        |  | $ | 79,395      | 
|                                                |  |   |             | 
|Gain (loss) on disposal of U.S. Mining Division |  | $ | Nil         | 
|                                                |  |   |             | 

The fair value of the EFR share consideration has been accounted for as a non-cash distribution of assets
to shareholders and has been recorded as a component of Deficit in the statement of financial position (see Consolidated Statements of Changes in Equity).

As a result of the transaction, the Company has presented the results of the U.S. Mining Division as discontinued operations and, in accordance with IFRS 5, has revised its statement of comprehensive
income (loss) to reflect this change in presentation. The consolidated statements of financial position and the consolidated statement of cash flows have not been revised. A summary of the impact of the discontinued operations on the consolidated
statement of cash flows is presented below.



- 15 -



---

The consolidated statement of income (loss) for the U.S Mining Division discontinued
operation for 2012 and 2011 is as follows:



|                                     |  |                 |          |   |                 |   |          |  
|------------------------------------ |  | --------------- | -------- | - | --------------- | - | -------- | -
|                                     |  | Year Ended      |         
|(in thousands)                       |  | December 312012 |          |   | December 312011 |  
|Revenues                             |  |                 |          |   |                 |   |          |  
|Mineral concentrates                 |  |                 | 37,419   |   |                 |   | 67,699   |  
|Services and other                   |  |                 | 275      |   |                 |   | 3,305    |  
|                                     |  |                 |          |   |                 |   |          |  
|                                     |  | $               | 37,694   |   |                 | $ | 71,004   |  
|                                     |  |                 |          |   |                 |   |          |  
|Expenses                             |  |                 |          |   |                 |   |          |  
|Operating expenses                   |  |                 | (31,300  | ) |                 |   | (76,245  | )
|Mineral property exploration         |  |                 | (470     | ) |                 |   | (678     | )
|General and administrative           |  |                 | (5,750   | ) |                 |   | (7,637   | )
|Impairment-goodwill                  |  |                 |         |   |                 |   | (32,625  | )
|Impairment-mineral properties        |  |                 | (54,471  | ) |                 |   |         |  
|Impairment-plant and equipment       |  |                 | (43,473  | ) |                 |   |         |  
|Other income (expense)               |  |                 | 5,165    |   |                 |   | 385      |  
|                                     |  |                 |          |   |                 |   |          |  
|                                     |  |                 | (130,299 | ) |                 |   | (116,800 | )
|                                     |  |                 |          |   |                 |   |          |  
|Income (loss) before finance charges |  |                 | (92,605  | ) |                 |   | (45,796  | )
|Finance income (expense)             |  |                 | 114      |   |                 |   | 70       |  
|                                     |  |                 |          |   |                 |   |          |  
|Income (loss) before taxes           |  |                 | (92,491  | ) |                 |   | (45,726  | )
|Income tax recovery (expense)        |  |                 |          |   |                 |   |          |  
|Current                              |  |                 | (2       | ) |                 |   | (26      | )
|Deferred                             |  |                 |         |   |                 |   | (565     | )
|                                     |  |                 |          |   |                 |   |          |  
|Net income (loss) for the period     |  | $               | (92,493  | ) |                 | $ | (46,317  | )
|                                     |  |                 |          |   |                 |   |          |  

The total estimated transaction costs incurred by Denison relating to the transaction (and included in
general and administrative expense above) for 2012 amounted to $2,502,000.

Cash flows for the U.S Mining Division discontinued
operation for 2012 and 2011 is as follows:



|                                         |  |                 |        |   |                 |   |         |  
|---------------------------------------- |  | --------------- | ------ | - | --------------- | - | ------- | -
|                                         |  | Year Ended      |       
|(in thousands)                           |  | December 312012 |        |   | December 312011 |  
|Cash inflow (outflow):                   |  |                 |        |   |                 |   |         |  
|Operating activities                     |  |                 | 10,683 |   |                 |   | (815    | )
|Investing activities                     |  |                 | (9,489 | ) |                 |   | (83,028 | )
|Financing activities                     |  |                 |       |   |                 |   |        |  
|                                         |  |                 |        |   |                 |   |         |  
|Net cash inflow (outflow) for the period |  | $               | 1,194  |   |                 | $ | (83,843 | )
|                                         |  |                 |        |   |                 |   |         |  

Acquisition of White Canyon Uranium Limited

On June 17, 2011, DMCs offer to acquire all of the outstanding shares of White Canyon Uranium Limited (WCU) closed
with 96.98% of shares outstanding accepting the offer. Compulsory acquisition proceedings to acquire the remaining shares of WCU were initiated on June 20, 2011 and were completed in early August 2011. DMCs cash offer of AUD $0.24 per WCU
share resulted in a total purchase price of USD$61,027,000 (AUD$57,163,000).

On June 29, 2012, the shares of WCU were
sold to EFR as part of the U.S Mining Division divestiture.

As a result of the acquisition, the Company acquired WCUs
key assets located in south eastern Utah, near Denisons formerly owned White Mesa mill. WCUs primary holdings consisted of 100% interests in the Daneros producing mine, the Lark Royal advanced project and the Thompson, Geitus, Blue Jay
and Marcy Look exploration projects.

This transaction was accounted for as a business combination, using the purchase method,
with DMC as the acquirer. WCUs results of operations were consolidated with those of Denison commencing as at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired was recorded as goodwill.



- 16 -



---

The following table summarizes the consideration paid for WCU and the final fair value of
assets acquired and liabilities assumed as at the June 17, 2011 acquisition date. These fair values were as follows:



|                                          |  |                 |        |  
|----------------------------------------- |  | --------------- | ------ | -
|(in thousands)                            |  | FinalFairValues |       
|Cash and cash equivalents                 |  | $               | 1,323  |  
|Trade and other receivables               |  |                 | 158    |  
|Inventories                               |  |                 |        |  
|Ore-in-stockpiles                         |  |                 | 3,711  |  
|Uranium concentrates and work-in-progress |  |                 | 584    |  
|Prepaid expenses and other                |  |                 | 42     |  
|Restricted cash and investments           |  |                 | 147    |  
|Property, plant and equipment             |  |                 |        |  
|Plant and equipment                       |  |                 | 26     |  
|Mineral properties                        |  |                 | 23,916 |  
|Goodwill                                  |  |                 | 32,625 |  
|                                          |  |                 |        |  
|Total assets                              |  |                 | 62,532 |  
|                                          |  |                 |        |  
|Accounts payable and accrued liabilities  |  |                 | 1,989  |  
|Reclamation obligations                   |  |                 | 81     |  
|Deferred income tax liability             |  |                 | (565   | )
|                                          |  |                 |        |  
|Total liabilities                         |  |                 | 1,505  |  
|                                          |  |                 |        |  
|Total cash consideration                  |  | $               | 61,027 |  
|                                          |  |                 |        |  

The goodwill relating to the acquisition was allocated to the U.S. Mining segment and was tested for
impairment at the end of 2011. In performing the impairment test for the U.S. mining segment in 2011, the Company concluded that the recoverable amount of the segment was lower than its carrying value. As a result, the Company has recognized an
impairment loss of $32,625,000 which it has fully allocated to goodwill. The Company used a fair value less costs to sell cash flow model to determine the recoverable amount for the segment. The future net cash flow model included estimates for
commodity prices, recoverable reserves and resources, operating costs and capital costs.

Nominal uranium spot price
projections used in the cash flow projection were within the range of current market consensus observed during the fourth quarter of 2011 and ranged from $54.00 to $81.00 per pound. All of these prices were discounted using a cumulative annual 2%
inflation rate. The post tax discount rate used in the model was 9%.

The consolidated statement of income (loss) for 2011
includes revenue of $nil and net loss of $33,637,000 (including the goodwill impairment charge noted above) with respect to the former operations of WCU. The Company included the results of WCU as part of its U.S. mining segment.

The total transaction costs incurred by Denison relating to the acquisition, and included in general and administrative expenses for 2011
amounted to $1,425,000.



|6. | CASH AND CASH EQUIVALENTS
|-- | -------------------------

The cash and cash equivalent balance consists of:



|                 |  |                    |        |  |                    |   |        | 
|---------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | 
|(in thousands)   |  | At December 312012 |        |  | At December 312011 |  
|Cash             |  | $                  | 4,614  |  |                    | $ | 24,999 | 
|Cash equivalents |  |                    | 33,574 |  |                    |   | 28,516 | 
|                 |  |                    |        |  |                    |   |        | 
|                 |  | $                  | 38,188 |  |                    | $ | 53,515 | 
|                 |  |                    |        |  |                    |   |        | 



- 17 -



---

|7. | TRADE AND OTHER RECEIVABLES
|-- | ---------------------------

The trade and other receivables balance consists of:



|                                              |  |                    |       |  |                    |   |        | 
|--------------------------------------------- |  | ------------------ | ----- |  | ------------------ | - | ------ | 
|(in thousands)                                |  | At December 312012 |       |  | At December 312011 |  
|Trade receivables  mineral concentrate sales |  | $                  |      |  |                    | $ | 7,762  | 
|Trade receivables  other                     |  |                    | 1,684 |  |                    |   | 3,746  | 
|Receivables in joint ownership arrangements   |  |                    | 186   |  |                    |   | 346    | 
|Sales tax receivables                         |  |                    | 322   |  |                    |   | 279    | 
|Sundry receivables                            |  |                    | 144   |  |                    |   | 446    | 
|Notes and lease receivables                   |  |                    | 302   |  |                    |   | 73     | 
|                                              |  |                    |       |  |                    |   |        | 
|                                              |  | $                  | 2,638 |  |                    | $ | 12,652 | 
|                                              |  |                    |       |  |                    |   |        | 



|8. | INVENTORIES
|-- | -----------

The
inventories balance consists of:



|                                           |  |                    |       |  |                    |   |        | 
|------------------------------------------ |  | ------------------ | ----- |  | ------------------ | - | ------ | 
|(in thousands)                             |  | At December 312012 |       |  | At December 312011 |  
|Uranium concentrates and work-in-progress  |  | $                  | 4     |  |                    | $ | 14,676 | 
|Vanadium concentrates and work-in-progress |  |                    |      |  |                    |   | 18     | 
|Inventory of ore in stockpiles             |  |                    | 2,203 |  |                    |   | 17,515 | 
|Mine and mill supplies                     |  |                    | 1,647 |  |                    |   | 6,053  | 
|                                           |  |                    |       |  |                    |   |        | 
|                                           |  | $                  | 3,854 |  |                    | $ | 38,262 | 
|                                           |  |                    |       |  |                    |   |        | 
|Inventoriesby duration:                   |  |                    |       |  |                    |   |        | 
|Current                                    |  | $                  | 1,792 |  |                    | $ | 36,106 | 
|Long-term  ore in stockpiles              |  |                    | 2,062 |  |                    |   | 2,156  | 
|                                           |  |                    |       |  |                    |   |        | 
|                                           |  | $                  | 3,854 |  |                    | $ | 38,262 | 
|                                           |  |                    |       |  |                    |   |        | 

Long-term ore in stockpile inventory represents an estimate of the amount of ore on the stockpile in
excess of the next twelve months of planned mill production.



|9. | INVESTMENTS
|-- | -----------

The
investments balance consists of:



|                                 |  |                    |       |  |                    |   |     | 
|-------------------------------- |  | ------------------ | ----- |  | ------------------ | - | --- | 
|(in thousands)                   |  | At December 312012 |       |  | At December 312011 |  
|Investments:                     |  |                    |       |  |                    |   |     | 
|Equity instruments at fair value |  | $                  | 2,843 |  |                    | $ | 522 | 
|                                 |  |                    |       |  |                    |   |     | 
|                                 |  | $                  | 2,843 |  |                    | $ | 522 | 
|                                 |  |                    |       |  |                    |   |     | 

At December 31, 2012, investments consist of equity instruments in publicly-traded companies at a
fair value of $2,843,000 (December 31, 2011: $522,000).

Investment Purchases and Impairments

During 2012, the Company acquired additional equity instruments at a cost of $1,816,000.

During 2012 and 2011, the Company recorded investment impairment charges of $64,000 and $896,000, respectively. The resulting loss has
been included in other income (expense) in the consolidated statements of income (loss) (see note 22).



- 18 -



---

|10. | RESTRICTED CASH AND INVESTMENTS
|--- | -------------------------------

The Company has certain restricted cash and investments deposited to collateralize its reclamation obligations. The restricted cash and investments balance consists of:



|                                           |  |                    |       |  |                    |   |        | 
|------------------------------------------ |  | ------------------ | ----- |  | ------------------ | - | ------ | 
|(in thousands)                             |  | At December 312012 |       |  | At December 312011 |  
|Cash                                       |  | $                  | 42    |  |                    | $ | 1      | 
|Cash equivalents                           |  |                    | 2,212 |  |                    |   | 2,512  | 
|Investments                                |  |                    |      |  |                    |   | 24,280 | 
|                                           |  |                    |       |  |                    |   |        | 
|                                           |  | $                  | 2,254 |  |                    | $ | 26,793 | 
|                                           |  |                    |       |  |                    |   |        | 
|Restricted cash and investments  by item: |  |                    |       |  |                    |   |        | 
|U.S. mill and mine reclamation             |  | $                  |      |  |                    | $ | 24,651 | 
|Elliot Lake reclamation trust fund         |  |                    | 2,254 |  |                    |   | 2,142  | 
|                                           |  |                    |       |  |                    |   |        | 
|                                           |  | $                  | 2,254 |  |                    | $ | 26,793 | 
|                                           |  |                    |       |  |                    |   |        | 

U.S. Mill and Mine Reclamation

The Company had cash, cash equivalents and fixed income securities as collateral for various bonds posted in favour of the State of Utah,
the applicable state regulatory agencies in Colorado and Arizona and the U.S. Bureau of Land Management for estimated reclamation costs associated with its formerly owned White Mesa mill and U.S. mining properties.

In 2012, the Company did not deposit any monies into its collateral account (2011: $3,200,000). The Company has divested these assets as
part of its U.S. Mining Division transaction with EFR (see note 5).

Elliot Lake Reclamation Trust Fund

The Company has the obligation to maintain its decommissioned Elliot Lake uranium mine pursuant to a Reclamation Funding Agreement
effective December 21, 1995 (Agreement) with the Governments of Canada and Ontario. The Agreement, as further amended in February 1999, requires the Company to maintain funds in the Reclamation Trust Fund equal to estimated
reclamation spending for the succeeding six calendar years, less interest expected to accrue on the funds during the period. Withdrawals from this Reclamation Trust Fund can only be made with the approval of the Governments of Canada and Ontario to
fund Elliot Lake monitoring and site restoration costs.

In 2012, the Company deposited an additional $731,000 (CAD$732,000)
into the Elliot Lake Reclamation Trust Fund and withdrew $697,000 (CAD$696,000).In 2011, the Company deposited an additional $706,000 (CAD$695,000) into the Elliot Lake Reclamation Trust Fund and withdrew $1,175,000 (CAD$1,163,000).



- 19 -



---

|11. | PROPERTY, PLANT AND EQUIPMENT
|--- | -----------------------------

The property, plant and equipment balance consists of:



|                         |  |                    |         |   |                    |   |         |  
|------------------------ |  | ------------------ | ------- | - | ------------------ | - | ------- | -
|(in thousands)           |  | At December 312012 |         |   | At December 312011 |  
|Plant and equipment:     |  |                    |         |   |                    |   |         |  
|Cost                     |  | $                  | 91,467  |   |                    | $ | 191,067 |  
|Construction-in-progress |  |                    | 7,880   |   |                    |   | 7,183   |  
|Accumulated depreciation |  |                    | (12,143 | ) |                    |   | (53,804 | )
|                         |  |                    |         |   |                    |   |         |  
|Net book value           |  | $                  | 87,204  |   |                    | $ | 144,446 |  
|                         |  |                    |         |   |                    |   |         |  
|Mineral properties:      |  |                    |         |   |                    |   |         |  
|Cost                     |  | $                  | 160,915 |   |                    | $ | 230,403 |  
|Accumulated amortization |  |                    | (231    | ) |                    |   | (7,479  | )
|                         |  |                    |         |   |                    |   |         |  
|Net book value           |  | $                  | 160,684 |   |                    | $ | 222,924 |  
|                         |  |                    |         |   |                    |   |         |  
|Net book value           |  | $                  | 247,888 |   |                    | $ | 367,370 |  
|                         |  |                    |         |   |                    |   |         |  

The property, plant and equipment continuity summary is as follows:



|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|----------------------------- |  | ---- | ------- | - | ------------------------------------- | - | ------- | ------------- |  | - | ------- | -
|(in thousands)                |  | Cost |         |   | AccumulatedAmortization /Depreciation |   |         | Net BookValue | 
|Plant and equipment:          |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  January 1, 2011     |  | $    | 193,157 |   |                                       | $ | (43,314 | )             |  | $ | 149,843 |  
|Additions                     |  |      | 8,297   |   |                                       |   |        |               |  |   | 8,297   |  
|Amortization                  |  |      |        |   |                                       |   | (72     | )             |  |   | (72     | )
|Business acquisition (note 5) |  |      | 70      |   |                                       |   | (44     | )             |  |   | 26      |  
|Depreciation                  |  |      |        |   |                                       |   | (11,876 | )             |  |   | (11,876 | )
|Disposals                     |  |      | (2,102  | ) |                                       |   | 1,131   |               |  |   | (971    | )
|Reclamation adjustment        |  |      | 1,046   |   |                                       |   | 60      |               |  |   | 1,106   |  
|Foreign exchange              |  |      | (2,218  | ) |                                       |   | 311     |               |  |   | (1,907  | )
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  December 31, 2011   |  | $    | 198,250 |   |                                       | $ | (53,804 | )             |  | $ | 144,446 |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Additions                     |  |      | 4,231   |   |                                       |   |        |               |  |   | 4,231   |  
|Amortization                  |  |      |        |   |                                       |   | (55     | )             |  |   | (55     | )
|Depreciation                  |  |      |        |   |                                       |   | (5,293  | )             |  |   | (5,293  | )
|Disposals                     |  |      | (505    | ) |                                       |   | 466     |               |  |   | (39     | )
|Business divestiture (note 5) |  |      | (61,368 | ) |                                       |   | 46,757  |               |  |   | (14,611 | )
|Impairment (note 5)           |  |      | (43,473 | ) |                                       |   |        |               |  |   | (43,473 | )
|Reclamation adjustment        |  |      | 152     |   |                                       |   |        |               |  |   | 152     |  
|Foreign exchange              |  |      | 2,060   |   |                                       |   | (214    | )             |  |   | 1,846   |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  December 31, 2012   |  | $    | 99,347  |   |                                       | $ | (12,143 | )             |  | $ | 87,204  |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Mineral properties:           |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  January 1, 2011     |  | $    | 193,727 |   |                                       | $ | (1,406  | )             |  | $ | 192,321 |  
|Additions                     |  |      | 19,429  |   |                                       |   |        |               |  |   | 19,429  |  
|Amortization                  |  |      |        |   |                                       |   | (6,078  | )             |  |   | (6,078  | )
|Business acquisition (note 5) |  |      | 23,916  |   |                                       |   |        |               |  |   | 23,916  |  
|Foreign exchange              |  |      | (6,669  | ) |                                       |   | 5       |               |  |   | (6,664  | )
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  December 31, 2011   |  | $    | 230,403 |   |                                       | $ | (7,479  | )             |  | $ | 222,924 |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Additions                     |  |      | 10,293  |   |                                       |   |        |               |  |   | 10,293  |  
|Amortization                  |  |      |        |   |                                       |   | (1,710  | )             |  |   | (1,710  | )
|Business divestiture (note 5) |  |      | (25,430 | ) |                                       |   | 8,964   |               |  |   | (16,466 | )
|Impairment (note 5)           |  |      | (54,471 | ) |                                       |   |        |               |  |   | (54,471 | )
|Foreign exchange              |  |      | 120     |   |                                       |   | (6      | )             |  |   | 114     |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  
|Balance  December 31, 2012   |  | $    | 160,915 |   |                                       | $ | (231    | )             |  | $ | 160,684 |  
|                              |  |      |         |   |                                       |   |         |               |  |   |         |  



- 20 -



---

Plant and EquipmentMining

The Company had a 100% interest in the White Mesa mill located in Utah and mines located in Arizona, Colorado and Utah. The Company
divested these assets as part of its U.S. Mining Division transaction with EFR (see note 5).

The Company has a 22.5% interest
in the McClean Lake mill and mines located in the Athabasca Basin of Saskatchewan, Canada. The mill is currently on stand-by and is scheduled to remain so for part of 2013 with start-up anticipated during 2013. A toll milling agreement has been
signed with the participants in the Cigar Lake joint venture that provides for the processing of the future output of the Cigar Lake mine at the McClean Lake mill, for which the owners of the McClean Lake mill will receive a toll milling fee and
other benefits. In determining the amortization rate for the McClean Lake mill, the amount to be amortized has been adjusted to reflect Denisons expected share of mill feed from future toll milling.

Plant and EquipmentServices and Other

The environmental services division of the Company provides mine decommissioning and decommissioned site monitoring services for third parties.

Mineral Properties

The Company has various interests in development and exploration projects located in Canada, Mongolia and Zambia which are held directly or through option or joint venture agreements.

The most significant of the Companys mineral property interests are as follows:

Canada

The Company has a 22.5% interest in the McClean Lake project and a 25.17% interest in the Midwest project located in the Athabasca Basin of Saskatchewan, Canada.

Other significant mineral property interests that the Company has in Canada, also located in the Athabasca Basin, include:



| | a) | Wheeler River  the Company has a 60% interest in the project;
| | -- | --------------------------------------------------------------



| | b) | Moore Lake  the Company has a 75% interest in the project subject to a 2.5% net smelter return royalty;
| | -- | --------------------------------------------------------------------------------------------------------



| | c) | Wolly  the Company has a 22.5% interest in the project; and
| | -- | ------------------------------------------------------------



| | d) | Park Creek  the Company has entered into an option agreement to earn up to a 75% interest in the project. Under the option, the Company was required to incur
exploration expenditures of CAD$2,800,000 on or before December 31, 2008 to earn an initial 49% interest and has an opportunity to earn an additional 26% interest by incurring a further CAD$3,350,000 on or before December 31, 2017. As at
December 31, 2012, the Company has incurred a total of CAD$4,219,000 towards the option and has earned a 49% ownership interest in the project.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

United States

The Company had 100% interests in various mines in
the Colorado Plateau, Arizona Strip, Henry Mountain and White Canyon mining districts located in Colorado, Arizona and Utah some of which were acquired in June 2011, in conjunction with the Companys purchase of WCU (see note 5). The Company
has divested these assets as part of its U.S. Mining Division transaction with EFR (see note 5).

Mongolia

The Company currently has an 85% interest (70% interest at December 31, 2011) in and is the managing partner of
the Gurvan Saihan Joint Venture (GSJV) in Mongolia. The other party to the GSJV is the Mongolian government with a 15% interest. The results of the GSJV have been 100% consolidated in these financial statements since the Company
exercises control and its partner in the GSJV has a carried interest at this time.

Under the Nuclear Energy Law of Mongolia,
the Mongolian participant in the GSJV is entitled to hold a 34% to 51% interest in the GSJV, depending on the amount of historic exploration that was funded by the government of Mongolia, to be acquired at no cost to the Mongolian participant. This
interest will be held by Mon-Atom LLC, the Mongolian state owned uranium company.



- 21 -



---

The Company and Mon-Atom are proceeding with restructuring the GSJV to meet the requirements
of the Nuclear Energy law, pending government reviews and authorizations. In March 2012, the Company acquired the interest of Geologorazvedka, a Russian entity which held 15%, for cash consideration of $742,000, including transaction fees, and the
release of the Russian entitys share of unfunded joint venture obligations. This additional interest is expected to be transferred to Mon-Atom as part of the restructuring plan and the payment of $742,000 has been expensed and included in
other income (expense) in the statements of operations (see note 22).

The final restructuring of the GSJV is expected to
result in the Company having its interest reduced to 66%. Discussions with Mon-Atom are progressing and the anticipated timing of the completion of the restructuring is uncertain at this time.

Zambia

The Company has a 100% interest in the Mutanga project located in Zambia.



|12. | INTANGIBLES
|--- | -----------

The
intangibles balance consists of:



|                                  |  |                    |        |   |                    |   |        |  
|--------------------------------- |  | ------------------ | ------ | - | ------------------ | - | ------ | -
|(in thousands)                    |  | At December 312012 |        |   | At December 312011 |  
|Cost                              |  | $                  | 7,438  |   |                    | $ | 7,276  |  
|Accumulated amortization          |  |                    | (5,430 | ) |                    |   | (4,438 | )
|                                  |  |                    |        |   |                    |   |        |  
|Net book value                    |  | $                  | 2,008  |   |                    | $ | 2,838  |  
|                                  |  |                    |        |   |                    |   |        |  
|Net book value-by item:           |  |                    |        |   |                    |   |        |  
|UPC management services agreement |  |                    | 2,008  |   |                    |   | 2,838  |  
|                                  |  |                    |        |   |                    |   |        |  
|Net book value                    |  | $                  | 2,008  |   |                    | $ | 2,838  |  
|                                  |  |                    |        |   |                    |   |        |  

The intangibles continuity summary is as follows:



|                            |  |      |       |   |                         |   |        |               |  |   |       |  
|--------------------------- |  | ---- | ----- | - | ----------------------- | - | ------ | ------------- |  | - | ----- | -
|(in thousands)              |  | Cost |       |   | AccumulatedAmortization |   |        | NetBook Value | 
|Balance  January 1, 2011   |  | $    | 7,439 |   |                         | $ | (3,645 | )             |  | $ | 3,794 |  
|Amortization                |  |      |      |   |                         |   | (898   | )             |  |   | (898  | )
|Foreign exchange            |  |      | (163  | ) |                         |   | 105    |               |  |   | (58   | )
|                            |  |      |       |   |                         |   |        |               |  |   |       |  
|Balance  December 31, 2011 |  | $    | 7,276 |   |                         | $ | (4,438 | )             |  | $ | 2,838 |  
|                            |  |      |       |   |                         |   |        |               |  |   |       |  
|Amortization                |  |      |      |   |                         |   | (888   | )             |  |   | (888  | )
|Foreign exchange            |  |      | 162   |   |                         |   | (104   | )             |  |   | 58    |  
|                            |  |      |       |   |                         |   |        |               |  |   |       |  
|Balance  December 31, 2012 |  | $    | 7,438 |   |                         | $ | (5,430 | )             |  | $ | 2,008 |  
|                            |  |      |       |   |                         |   |        |               |  |   |       |  

UPC Management Services Agreement

The UPC management services agreement is associated with the acquisition of Denison Mines Inc (DMI) in 2006. The contract is
being amortized over its estimated useful life.



|13. | POST-EMPLOYMENT BENEFITS
|--- | ------------------------

The Company provides post employment benefits for former Canadian employees who retired on immediate pension prior to 1997. The post
employment benefits provided include life insurance and medical and dental benefits as set out in the applicable group policies but does not include pensions. No post employment benefits are provided to employees outside the employee group
referenced above. The post employment benefit plan is not funded.

The effective date of the most recent actuarial valuation of
the accrued benefit obligation is December 31, 2011. The amount accrued is based on estimates provided by the plan administrator which are based on past experience, limits on coverage as set out in the applicable group policies and assumptions
about future cost trends. The significant assumptions used in the valuation are listed below:



| |  |  | Discount rate of 3.65%;
| | - |  | -----------------------



| |  |  | Medical cost trend rates at 7.00% per annum initially, grading down to 4.50% per annum over 20 years and remaining at 4.50% per annum
thereafter; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



- 22 -



---

| |  |  | Dental cost trend rates at 4.00% per annum for the first ten years, 3.50% per annum for the following ten years and 3.0% per annum
thereafter;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------

The post-employment benefits balance consists of:



|                                                |  |                    |       |  |                    |   |       | 
|----------------------------------------------- |  | ------------------ | ----- |  | ------------------ | - | ----- | 
|(in thousands)                                  |  | At December 312012 |       |  | At December 312011 |  
|Accrued benefit obligation                      |  | $                  | 3,664 |  |                    | $ | 3,685 | 
|Unamortized experience gain                     |  |                    | 188   |  |                    |   | 206   | 
|                                                |  |                    |       |  |                    |   |       | 
|                                                |  | $                  | 3,852 |  |                    | $ | 3,891 | 
|                                                |  |                    |       |  |                    |   |       | 
|Post-employment benefits liability-by duration: |  |                    |       |  |                    |   |       | 
|Current                                         |  | $                  | 402   |  |                    | $ | 393   | 
|Non-current                                     |  |                    | 3,450 |  |                    |   | 3,498 | 
|                                                |  |                    |       |  |                    |   |       | 
|                                                |  | $                  | 3,852 |  |                    | $ | 3,891 | 
|                                                |  |                    |       |  |                    |   |       | 

The post-employment benefits continuity summary is as follows:



|                                |  |   |       |  
|------------------------------- |  | - | ----- | -
|(in thousands)                  |  |   |      
|BalanceJanuary 1, 2011         |  | $ | 4,019 |  
|Benefits paid                   |  |   | (304  | )
|Interest cost                   |  |   | 285   |  
|Amortization of experience gain |  |   | (23   | )
|Foreign exchange                |  |   | (86   | )
|                                |  |   |       |  
|BalanceDecember 31, 2011       |  | $ | 3,891 |  
|                                |  |   |       |  
|Benefits paid                   |  |   | (235  | )
|Interest cost                   |  |   | 132   |  
|Amortization of experience gain |  |   | (22   | )
|Foreign exchange                |  |   | 86    |  
|                                |  |   |       |  
|BalanceDecember 31, 2012       |  | $ | 3,852 |  
|                                |  |   |       |  

The unamortized experience gain is being amortized on a straight-line basis over the average life
expectancy of the retiree group of 9.5 years as per the December 31, 2011 actuarial valuation.



|14. | RECLAMATION OBLIGATIONS
|--- | -----------------------

The reclamation obligations balance consists of:



|                                                   |  |                    |        |  |                    |   |        | 
|-------------------------------------------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | 
|(in thousands)                                     |  | At December 312012 |        |  | At December 312011 |  
|Reclamation liabilityby location:                 |  |                    |        |  |                    |   |        | 
|U.S Mill and Mines                                 |  | $                  |       |  |                    | $ | 7,140  | 
|Elliot Lake                                        |  |                    | 12,673 |  |                    |   | 11,800 | 
|McClean and Midwest Joint Ventures                 |  |                    | 2,991  |  |                    |   | 2,636  | 
|                                                   |  |                    |        |  |                    |   |        | 
|                                                   |  | $                  | 15,664 |  |                    | $ | 21,576 | 
|                                                   |  |                    |        |  |                    |   |        | 
|Reclamation and remediation liabilityby duration: |  |                    |        |  |                    |   |        | 
|Current                                            |  |                    | 848    |  |                    |   | 622    | 
|Non-current                                        |  |                    | 14,816 |  |                    |   | 20,954 | 
|                                                   |  |                    |        |  |                    |   |        | 
|                                                   |  | $                  | 15,664 |  |                    | $ | 21,576 | 
|                                                   |  |                    |        |  |                    |   |        | 



- 23 -



---

The reclamation obligations continuity summary is as follows:



|                                       |  |   |        |  
|-------------------------------------- |  | - | ------ | -
|(in thousands)                         |  |   |       
|BalanceJanuary 1, 2011                |  | $ | 17,565 |  
|Accretion                              |  |   | 1,169  |  
|Business acquisition (see note 5)      |  |   | 81     |  
|Expenditures incurred                  |  |   | (812   | )
|Liability adjustments-income statement |  |   | 2,690  |  
|Liability adjustments-balance sheet    |  |   | 1,106  |  
|Foreign exchange                       |  |   | (223   | )
|                                       |  |   |        |  
|BalanceDecember 31, 2011              |  | $ | 21,576 |  
|                                       |  |   |        |  
|Accretion                              |  |   | 990    |  
|Business divestiture (see note 5)      |  |   | (7,336 | )
|Expenditures incurred                  |  |   | (797   | )
|Liability adjustments-income statement |  |   | 762    |  
|Liability adjustments-balance sheet    |  |   | 151    |  
|Foreign exchange                       |  |   | 318    |  
|                                       |  |   |        |  
|BalanceDecember 31, 2012              |  | $ | 15,664 |  
|                                       |  |   |        |  

Site Restoration: U.S. Mill and Mines

The decommissioning and reclamation of the White Mesa mill and U.S. mines are subject to legal and regulatory requirements. Estimates of
the costs of reclamation are reviewed periodically by the applicable regulatory authorities. The above accrual represents the Companys best estimate of the present value of future reclamation costs, discounted at rates ranging from 4.98% to
5.67%. As at December 31, 2011, the undiscounted amount of estimated future reclamation costs was $23,082,000. The Company has divested these liabilities as part of it U.S. Mining Division transaction with EFR (see note 5).

Site Restoration: Elliot Lake

The Elliot Lake uranium mine was closed in 1992 and capital works to decommission this site were completed in 1997. The remaining provision is for the estimated cost of monitoring the Tailings Management
Areas at the Company and Stanrock sites and for treatment of water discharged from these areas. The Company conducts its activities at both sites pursuant to decommissioning licenses issued by the Canadian Nuclear Safety Commission. The above
accrual represents the Companys best estimate of the present value of the total future reclamation cost based on assumptions as to levels of treatment, which will be required in the future, discounted at 5.26% (2011: 5.41%). As at
December 31, 2012, the undiscounted amount of estimated future reclamation costs is $27,967,000 (CAD$27,825,000) (December 31, 2011: $26,990,000 (CAD$27,448,000)).

Spending on restoration activities at the Elliot Lake site is funded from monies in the Elliot Lake Reclamation Trust fund (see note 10).

Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture

The McClean Lake and Midwest operations are subject to environmental regulations as set out by the Saskatchewan government and the
Canadian Nuclear Safety Commission. Cost estimates of the estimated future decommissioning and reclamation activities are prepared periodically and filed with the applicable regulatory authorities for approval. The above accrual represents the
Companys best estimate of the present value of the future reclamation cost contemplated in these cost estimates discounted at 5.26% (2011: 5.41%). As at December 31, 2012, the undiscounted amount of estimated future reclamation costs is
$9,496,000 (CAD$9,448,000) (2011: $9,105,000 (CAD$9,260,000)). Reclamation costs are expected to be incurred between 2025 and 2052.

Under the Mineral Industry Environmental Protection Regulations (1996), the Company is required to provide its pro-rata share of financial assurances to the Province. As at December 31, 2012, the
Company has provided irrevocable standby letters of credit, from a chartered bank, in favour of Saskatchewan Environment, totalling CAD$9,698,000.



- 24 -



---

|15. | DEBT OBLIGATIONS
|--- | ----------------

The
debt obligations balance consists of:



|                                  |  |                    |     |  |                    |   |     | 
|--------------------------------- |  | ------------------ | --- |  | ------------------ | - | --- | 
|(in thousands)                    |  | At December 312012 |     |  | At December 312011 |  
|Notes payable and other financing |  | $                  | 229 |  |                    | $ | 221 | 
|                                  |  |                    |     |  |                    |   |     | 
|                                  |  | $                  | 229 |  |                    | $ | 221 | 
|                                  |  |                    |     |  |                    |   |     | 
|Debt obligations, by duration:    |  |                    |     |  |                    |   |     | 
|Current                           |  |                    | 125 |  |                    |   | 111 | 
|Non-current                       |  |                    | 104 |  |                    |   | 110 | 
|                                  |  |                    |     |  |                    |   |     | 
|                                  |  | $                  | 229 |  |                    | $ | 221 | 
|                                  |  |                    |     |  |                    |   |     | 

Revolving Line of Credit

In June 2012, the Company entered into a revolving term credit facility (the facility) with the Bank of Nova Scotia for up to $15,000,000. The maturity date of the facility is June 28,
2013. This facility replaced a previously existing $35,000,000 revolving term facility.

The facility contains a covenant to
maintain a level of tangible net worth greater than or equal to the sum of $230,000,000 plus an amount equal to (i) 50% of each equity issue from and including March 31, 2012; and (ii) 50% of positive net income in each fiscal quarter
from and including March 31, 2012.

DMC has provided an unlimited full recourse guarantee and a pledge of all of the
shares of DMI. DMI has provided a first-priority security interest in all present and future personal property and an assignment of its rights and interests under all material agreements relative to the McClean Lake and Midwest projects.

Interest payable under the facility is bankers acceptance or LIBOR rate plus a margin or prime rate plus a margin. The facility is subject
to standby fees.

At December 31, 2012, the Company has no outstanding borrowings under the facility (December 31,
2011$nil) and it is in compliance with its facility covenants. At December 31, 2012, approximately $9,748,000 of the facility is being utilized as collateral for certain letters of credit and is not available to draw upon (December 31,
2011$9,536,000). During 2012, the Company did not incur any interest under the facility.

The Company has deferred
$40,000 (CAD$39,000) of incremental costs associated with the set-up of the facility. These costs are being amortized over the one year term of the facility. The unamortized portion of the asset is included in prepaid expenses and other
on the consolidated balance sheet.

Scheduled Debt Obligation Maturities

The table below represents currently scheduled maturities of debt obligations over the next 4 years when it will be paid in full:



|               |  |   |     | 
|-------------- |  | - | --- | 
|(in thousands) |  |   |    
|2013           |  | $ | 125 | 
|2014           |  |   | 59  | 
|2015           |  |   | 35  | 
|2016           |  |   | 10  | 
|               |  |   |     | 
|               |  | $ | 229 | 
|               |  |   |     | 



- 25 -



---

|16. | OTHER LIABILITIES
|--- | -----------------

The
other liabilities balance consists of:



|                                                 |  |                    |       |  |                    |   |       | 
|------------------------------------------------ |  | ------------------ | ----- |  | ------------------ | - | ----- | 
|(in thousands)                                   |  | At December 312012 |       |  | At December 312011 |  
|Unamortized fair value of toll milling contracts |  | $                  | 1,005 |  |                    | $ | 982   | 
|Other                                            |  |                    |      |  |                    |   | 100   | 
|                                                 |  |                    |       |  |                    |   |       | 
|                                                 |  | $                  | 1,005 |  |                    | $ | 1,082 | 
|                                                 |  |                    |       |  |                    |   |       | 
|Other long-term liabilitiesby duration:         |  |                    |       |  |                    |   |       | 
|Current                                          |  |                    |      |  |                    |   |      | 
|Non-current                                      |  |                    | 1,005 |  |                    |   | 1,082 | 
|                                                 |  |                    |       |  |                    |   |       | 
|                                                 |  | $                  | 1,005 |  |                    | $ | 1,082 | 
|                                                 |  |                    |       |  |                    |   |       | 

Unamortized fair values of toll milling contracts are amortized to revenue on a pro-rata basis over the
estimated volume of the applicable contract.



|17. | INCOME TAXES
|--- | ------------

The income
tax recovery (expense) balance from continuing operations consists of:



|                                               |  |      |       |   |      |   |        |  
|---------------------------------------------- |  | ---- | ----- | - | ---- | - | ------ | -
|(in thousands)                                 |  | 2012 |       |   | 2011 |  
|Current income tax:                            |  |      |       |   |      |   |        |  
|Based on taxable income for the period         |  | $    |      |   |      | $ |       |  
|Prior period (under) over provision            |  |      | 318   |   |      |   | (31    | )
|                                               |  |      |       |   |      |   |        |  
|                                               |  |      | 318   |   |      |   | (31    | )
|                                               |  |      |       |   |      |   |        |  
|Deferred income tax:                           |  |      |       |   |      |   |        |  
|Origination/reversal of temporary differences  |  |      | 2,668 |   |      |   | 1,130  |  
|Tax benefit-previously unrecognized tax assets |  |      |      |   |      |   | 1,668  |  
|Change in tax rates                            |  |      | (23   | ) |      |   |       |  
|Prior year (under) over provision              |  |      | 926   |   |      |   | (1,137 | )
|                                               |  |      |       |   |      |   |        |  
|                                               |  |      | 3,571 |   |      |   | 1,661  |  
|                                               |  |      |       |   |      |   |        |  
|Income tax recovery (expense)                  |  | $    | 3,889 |   |      | $ | 1,630  |  
|                                               |  |      |       |   |      |   |        |  

The Company operates in multiple industries and jurisdictions, and the related income is subject to
varying rates of taxation. The combined Canadian tax rate reflects the federal and provincial tax rates in effect in Ontario, Canada for each applicable year. A reconciliation of the combined Canadian tax rate to the Companys effective rate of
income tax is as follows:



|                                                   |  |      |         |   |      |   |         |  
|-------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|(in thousands)                                     |  | 2012 |         |   | 2011 |  
|Income (loss) before taxes                         |  | $    | (29,344 | ) |      | $ | (26,182 | )
|Combined Canadian tax rate(1)                      |  |      | 26.50   | % |      |   | 28.25   | %
|                                                   |  |      |         |   |      |   |         |  
|Income tax recovery (expense) at combined rate     |  |      | 7,776   |   |      |   | 7,397   |  
|Difference in foreign tax rates                    |  |      | (190    | ) |      |   | (898    | )
|Non-deductible amounts                             |  |      | (1,272  | ) |      |   | (3,122  | )
|Non-taxable amounts                                |  |      |        |   |      |   | 665     |  
|Previously unrecognized future tax assets          |  |      |        |   |      |   | 1,668   |  
|Renunciation of tax attributes-flow through shares |  |      |        |   |      |   | (1,080  | )
|Change in deferred tax assets not recognized       |  |      | (4,265  | ) |      |   | (1,402  | )
|Prior year (under) over provision                  |  |      | 1,244   |   |      |   | (1,168  | )
|Other                                              |  |      | 596     |   |      |   | (430    | )
|                                                   |  |      |         |   |      |   |         |  
|Income tax recovery (expense)                      |  | $    | 3,889   |   |      | $ | 1,630   |  
|                                                   |  |      |         |   |      |   |         |  



|(1) | The combined Canadian federal / provincial tax rate declined in 2012 to reflect: a) a 1.5% decrease in the federal tax rate from 16.5% to 15.0% effective
January 1, 2012; and b) a 0.5% decrease in the Ontario tax rate from 12.0% to 11.5% effective July 1, 2011.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 26 -



---

The deferred income tax assets (liabilities) balance reported on the balance sheet is
comprised of the temporary differences as presented below:



|                                                  |  |                    |         |   |                    |   |         |  
|------------------------------------------------- |  | ------------------ | ------- | - | ------------------ | - | ------- | -
|(in thousands)                                    |  | At December 312012 |         |   | At December 312011 |  
|Deferred income tax assets:                       |  |                    |         |   |                    |   |         |  
|Property, plant and equipment, net                |  | $                  | 394     |   |                    | $ | 390     |  
|Deferred revenue                                  |  |                    |        |   |                    |   | 373     |  
|Post-employment benefits                          |  |                    | 1,039   |   |                    |   | 1,048   |  
|Reclamation and remediation obligations           |  |                    | 4,225   |   |                    |   | 6,879   |  
|Other long-term liabilities                       |  |                    | 271     |   |                    |   | 265     |  
|Tax loss carry forwards                           |  |                    | 4,720   |   |                    |   | 22,414  |  
|Other                                             |  |                    | 5,520   |   |                    |   | 3,984   |  
|                                                  |  |                    |         |   |                    |   |         |  
|Deferred income tax assets-gross                  |  |                    | 16,169  |   |                    |   | 35,353  |  
|Set-off against deferred income tax liabilities   |  |                    | (16,169 | ) |                    |   | (35,353 | )
|                                                  |  |                    |         |   |                    |   |         |  
|Deferred income tax assets-per balance sheet      |  | $                  |        |   |                    | $ |        |  
|                                                  |  |                    |         |   |                    |   |         |  
|Deferred income tax liabilities:                  |  |                    |         |   |                    |   |         |  
|Inventory                                         |  | $                  | (594    | ) |                    | $ | (1,848  | )
|Investments                                       |  |                    |        |   |                    |   | (19     | )
|Property, plant and equipment, net                |  |                    | (23,481 | ) |                    |   | (43,978 | )
|Intangibles                                       |  |                    | (542    | ) |                    |   | (764    | )
|Other                                             |  |                    | (1,001  | ) |                    |   | (1,491  | )
|                                                  |  |                    |         |   |                    |   |         |  
|Deferred income tax liabilities-gross             |  |                    | (25,618 | ) |                    |   | (48,100 | )
|Set-off of deferred income tax assets             |  |                    | 16,169  |   |                    |   | 35,353  |  
|                                                  |  |                    |         |   |                    |   |         |  
|Deferred income tax liabilities-per balance sheet |  | $                  | (9,449  | ) |                    | $ | (12,747 | )
|                                                  |  |                    |         |   |                    |   |         |  

The deferred income tax liability continuity summary is as follows:



|                                            |  |   |         |  
|------------------------------------------- |  | - | ------- | -
|(in thousands)                              |  |   |        
|BalanceJanuary 1, 2011                     |  | $ | (13,408 | )
|Recognized in profit/loss                   |  |   | 1,096   |  
|Recognized in OCI                           |  |   | 129     |  
|Recognized in equity                        |  |   | (1,461  | )
|Acquired in business combination (note 5)   |  |   | 565     |  
|Other, including foreign exchange gain/loss |  |   | 332     |  
|                                            |  |   |         |  
|BalanceDecember 31, 2011                   |  | $ | (12,747 | )
|                                            |  |   |         |  
|Recognized in profit/loss                   |  |   | 3,571   |  
|Other, including foreign exchange gain/loss |  |   | (273    | )
|                                            |  |   |         |  
|BalanceDecember 31, 2012                   |  | $ | (9,449  | )
|                                            |  |   |         |  

Management believes that it is not probable that sufficient taxable profit will be available in future
years to allow the benefit of the following deferred tax assets to be utilized:



|                                          |  |                    |        |  |                    |   |        | 
|----------------------------------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | 
|(in thousands)                            |  | At December 312012 |        |  | At December 312011 |  
|Deferred income tax assets not recognized |  |                    |        |  |                    |   |        | 
|Investments                               |  | $                  | 117    |  |                    | $ | 177    | 
|Property, plant and equipment             |  |                    | 9,125  |  |                    |   | 8,386  | 
|Tax losses  capital                      |  |                    | 31,208 |  |                    |   | 3,081  | 
|Tax losses  operating                    |  |                    | 19,560 |  |                    |   | 55,690 | 
|Tax credits                               |  |                    | 761    |  |                    |   | 681    | 
|Other deductible temporary differences    |  |                    | 2,615  |  |                    |   | 4,436  | 
|                                          |  |                    |        |  |                    |   |        | 
|Deferred income tax assets not recognized |  | $                  | 63,386 |  |                    | $ | 72,451 | 
|                                          |  |                    |        |  |                    |   |        | 



- 27 -



---

A geographic split of the Companys tax losses and tax credits not recognized and the
associated expiry dates of those losses and credits is as follows:



|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|---------------------------------------- |  | ---------- | --------- |  | ------------------ | - | ------ | ------------------ |  | - | ------- | -
|(in thousands)                           |  | ExpiryDate |           |  | At December 312012 |   |        | At December 312011 | 
|Tax lossesgross                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|Australia                                |  |            | Unlimited |  |                    | $ | 584    |                    |  | $ | 5,664   |  
|Canada                                   |  |            | 2028-2032 |  |                    |   | 75,217 |                    |  |   | 42,468  |  
|Mongolia                                 |  |            | 2018-2020 |  |                    |   | 742    |                    |  |   | 436     |  
|United States                            |  |            | 2026-2031 |  |                    |   |       |                    |  |   | 150,281 |  
|Zambia                                   |  |            | 2013-2022 |  |                    |   | 13,134 |                    |  |   | 8,963   |  
|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|Tax lossesgross                         |  |            |           |  |                    |   | 89,677 |                    |  |   | 207,812 |  
|Tax benefit at tax rate of 25%41.84%    |  |            |           |  |                    |   | 24,280 |                    |  |   | 78,104  |  
|Set-off against deferred tax liabilities |  |            |           |  |                    |   | (4,720 | )                  |  |   | (22,414 | )
|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|Total tax loss assets not recognized     |  |            |           |  |                    |   | 19,560 |                    |  |   | 55,690  |  
|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|Tax credits                              |  |            |           |  |                    |   |        |                    |  |   |         |  
|Canada                                   |  |            | 2028-2032 |  |                    |   | 761    |                    |  |   | 681     |  
|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  
|Total tax credit assets not recognized   |  |            |           |  |                    | $ | 761    |                    |  | $ | 681     |  
|                                         |  |            |           |  |                    |   |        |                    |  |   |         |  



|18. | SHARE CAPITAL
|--- | -------------

Denison is
authorized to issue an unlimited number of common shares without par value. A continuity summary of the issued and outstanding common shares and the associated dollar amounts is presented below:



|                                      |  |                       |             |  |  |   |         |  
|------------------------------------- |  | --------------------- | ----------- |  |  | - | ------- | -
|(in thousands except share amounts)   |  | Number ofCommonShares |             |  |  |  
|Balance at January 1, 2011            |  |                       | 366,200,665 |  |  | $ | 911,681 |  
|                                      |  |                       |             |  |  |   |         |  
|Issued for cash:                      |  |                       |             |  |  |   |         |  
|New issue gross proceeds              |  |                       | 18,300,000  |  |  |   | 66,024  |  
|New issue gross issue costs           |  |                       |            |  |  |   | (3,910  | )
|Exercise of stock options             |  |                       | 160,250     |  |  |   | 328     |  
|Fair value of stock options exercised |  |                       |            |  |  |   | 189     |  
|                                      |  |                       |             |  |  |   |         |  
|                                      |  |                       | 18,460,250  |  |  |   | 62,631  |  
|                                      |  |                       |             |  |  |   |         |  
|Balance at December 31, 2011          |  |                       | 384,660,915 |  |  | $ | 974,312 |  
|                                      |  |                       |             |  |  |   |         |  
|Issued for cash:                      |  |                       |             |  |  |   |         |  
|New issue gross proceeds              |  |                       | 4,145,000   |  |  |   | 7,019   |  
|New issue gross issue costs           |  |                       |            |  |  |   | (463    | )
|Flow-through share premium liability  |  |                       |            |  |  |   | (1,744  | )
|                                      |  |                       |             |  |  |   |         |  
|                                      |  |                       | 4,145,000   |  |  |   | 4,812   |  
|                                      |  |                       |             |  |  |   |         |  
|Balance at December 31, 2012          |  |                       | 388,805,915 |  |  | $ | 979,124 |  
|                                      |  |                       |             |  |  |   |         |  

New issues

In March 2011, the Company closed a public offering of 18,300,000 common shares at a price of CAD$3.55 per share for gross proceeds of $66,024,000 (CAD$64,965,000).

In October 2012, the Company completed a private placement of 4,145,000 flow-through common shares at a price of CAD$1.69 per share for
gross proceeds of $7,019,000 (CAD$7,005,000). The shares are subject to a four month hold period which will expire on February 27, 2013. The related flow-through share premium liability has been included as a component of accounts payable and
accrued liabilities on the balance sheet.

Flow-Through Share Issues

The Company finances a portion of its exploration programs through the use of flow-through share issuances. Income tax deductions relating
to these expenditures are claimable by the investors and not by the Company.



- 28 -



---

As at December 31, 2012, the Company estimates that is has spent CAD$386,000 of its
CAD$7,005,000 October 2012 flow-through share obligation. The Company plans to spend the remaining monies related to its flow-through share obligation in 2013. The Company renounced the income tax benefits of this issue to its subscribers in
February 2013.



|19. | SHARE PURCHASE WARRANTS
|--- | -----------------------

A continuity summary of the issued and outstanding share purchase warrants in terms of common shares of the Company and the associated
dollar amounts is presented below:



|                                        |  |                                |            |   |  |   |        |  
|--------------------------------------- |  | ------------------------------ | ---------- | - |  | - | ------ | -
|(in thousands except share amounts)     |  | Number ofCommon SharesIssuable |            |   |  |  
|Balance at January 1, 2011              |  |                                | 6,408,000  |   |  | $ | 5,830  |  
|Warrants expired  March 2006 Series(1) |  |                                | (6,408,000 | ) |  |   | (5,830 | )
|                                        |  |                                |            |   |  |   |        |  
|Balance at December 31, 2011 and 2012   |  |                                |           |   |  | $ | (5,830 | )
|                                        |  |                                |            |   |  |   |        |  



|(1) | The March 2006 series had an effective exercise price of CDN$10.42 per issuable share (CDN$30.00 per warrant adjusted for the 2.88 exchange ratio associated with the
Denison and IUC merger) and expired on March 1, 2011.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|20. | STOCK OPTIONS
|--- | -------------

The
Companys stock-based compensation plan (the Plan) provides for the granting of stock options up to 10% of the issued and outstanding common shares at the time of grant, subject to a maximum of 20 million common shares. As at
December 31, 2012, an aggregate of 13,019,450 options have been granted (less cancellations) since the Plans inception in 1997.

Under the Plan, all stock options are granted at the discretion of the Companys board of directors, including any vesting provisions if applicable. The term of any stock option granted may not
exceed ten years and the exercise price may not be lower than the closing price of the Companys shares on the last trading day immediately preceding the date of grant. In general, stock options granted under the Plan have five year terms and
vesting periods up to thirty months.

A continuity summary of the stock options of the Company granted under the Plan is
presented below:



|                                              |  |                       |            |   |                                              |   |      | 
|--------------------------------------------- |  | --------------------- | ---------- | - | -------------------------------------------- | - | ---- | 
|                                              |  | Number ofCommonShares |            |   | Weighted-AverageExercisePrice perShare(CAD$) |  
|Stock options outstandingbeginning of period |  |                       | 7,464,414  |   |                                              | $ | 2.70 | 
|Granted                                       |  |                       | 2,167,000  |   |                                              |   | 1.49 | 
|Forfeitures  U.S Mining Division(1)          |  |                       | (2,404,250 | ) |                                              |   | 2.27 | 
|Forfeitures                                   |  |                       | (213,399   | ) |                                              |   | 2.72 | 
|                                              |  |                       |            |   |                                              |   |      | 
|Stock options outstandingend of period       |  |                       | 7,013,765  |   |                                              | $ | 2.47 | 
|                                              |  |                       |            |   |                                              |   |      | 
|Stock options exercisableend of period       |  |                       | 5,326,765  |   |                                              | $ | 2.65 | 
|                                              |  |                       |            |   |                                              |   |      | 



|(1) | Represents the options forfeited by the employee group associated with the U.S. Mining Division divestiture to EFR (see note 5).
|--- | --------------------------------------------------------------------------------------------------------------------------------



- 29 -



---

A summary of the Companys stock options outstanding at December 31, 2012 is
presented below:



|                                          |  |                                                |      |  |                       |  |           |                                              |  |   |      | 
|----------------------------------------- |  | ---------------------------------------------- | ---- |  | --------------------- |  | --------- | -------------------------------------------- |  | - | ---- | 
|Range of Exercise
Prices per Share (CAD$) |  | WeightedAverageRemainingContractualLife(Years) |      |  | Number ofCommonShares |  |           | Weighted-AverageExercisePrice perShare(CAD$) | 
|Stock options outstanding                 |  |                                                |      |  |                       |  |           |                                              |  |   |      | 
|$ 1.16 to $ 2.49                          |  |                                                | 2.10 |  |                       |  | 5,088,626 |                                              |  | $ | 1.84 | 
|$ 2.50 to $ 4.99                          |  |                                                | 2.75 |  |                       |  | 1,160,800 |                                              |  |   | 3.19 | 
|$ 5.00 to $ 7.49                          |  |                                                | 2.11 |  |                       |  | 684,339   |                                              |  |   | 5.34 | 
|$ 7.50 to $ 7.95                          |  |                                                | 0.37 |  |                       |  | 80,000    |                                              |  |   | 7.95 | 
|                                          |  |                                                |      |  |                       |  |           |                                              |  |   |      | 
|Stock options outstanding end of period  |  |                                                | 2.19 |  |                       |  | 7,013,765 |                                              |  | $ | 2.47 | 
|                                          |  |                                                |      |  |                       |  |           |                                              |  |   |      | 

Options outstanding at December 31, 2012 expire between February 2013 and December 2017.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model. The following table
outlines the range of assumptions used in the model to determine the fair value of options granted:



|                                           |  |                     |  |                    
|------------------------------------------ |  | ------------------- |  | -------------------
|                                           |  | 2012                |  | 2011               
|Risk-free interest rate                    |  | 1.21%  1.39%       |  | 1.56%  2.34%      
|Expected stock price volatility            |  | 65.5%  92.8%       |  | 90.7%  92.4%      
|Expected life                              |  | 3.7 years           |  | 3.7 years          
|Estimated forfeiture rate(1)               |  | 4.7%                |  | 5.1%               
|Expected dividend yield                    |  |                    |  |                   
|Fair value per share under options granted |  | CAD$0.56  CAD$0.97 |  | CAD$0.99  CAD$2.04



|(1) | The estimated forfeiture rate excludes 2,404,250 stock options that were forfeited in the third quarter of 2012 due to the U.S. Mining Division transaction with EFR
(see note 5).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The fair values of stock options with vesting provisions are amortized on a graded method basis as
stock-based compensation expense over the applicable vesting periods. Included in the statement of income (loss) is stock-based compensation of $1,500,000 for 2012 and $3,333,000 for 2011. At December 31, 2012, the Company had an additional
$559,000 in stock-based compensation expense to be recognized periodically to December 2014.



- 30 -



---

|21. | ACCUMULATED OTHER COMPREHENSIVE INCOME
|--- | --------------------------------------

The accumulated other comprehensive income balance consists of:



|                                         |  |                    |        |   |                    |   |        |  
|---------------------------------------- |  | ------------------ | ------ | - | ------------------ | - | ------ | -
|(in thousands)                           |  | At December 312012 |        |   | At December 312011 |  
|Cumulative foreign currency translation  |  | $                  | 11,058 |   |                    | $ | 11,336 |  
|Unrealized gains (losses) on investments |  |                    |        |   |                    |   |        |  
|Gross                                    |  |                    | (285   | ) |                    |   | (319   | )
|Tax effect                               |  |                    |       |   |                    |   |       |  
|                                         |  |                    |        |   |                    |   |        |  
|                                         |  | $                  | 10,773 |   |                    | $ | 11,017 |  
|                                         |  |                    |        |   |                    |   |        |  



|22. | SUPPLEMENTAL FINANCIAL INFORMATION
|--- | ----------------------------------

The components of operating expenses from continuing operations are as follows:



|                                             |  |                 |         |   |                 |   |         |  
|-------------------------------------------- |  | --------------- | ------- | - | --------------- | - | ------- | -
|                                             |  | Year Ended      |        
|(in thousands)                               |  | December 312012 |         |   | December 312011 |  
|Cost of goods and services sold:             |  |                 |         |   |                 |   |         |  
|COGS  mineral concentrates                  |  | $               |        |   |                 | $ | (6,659  | )
|Operating Overheads:                         |  |                 |         |   |                 |   |         |  
|Mining, other development expense            |  |                 | (5,674  | ) |                 |   | (3,353  | )
|Milling, conversion expense                  |  |                 | (72     | ) |                 |   | (6,123  | )
|Less absorption:                             |  |                 |         |   |                 |   |         |  
|-Stockpiles, mineral properties              |  |                 | 2,278   |   |                 |   | 2,614   |  
|-Concentrates                                |  |                 |        |   |                 |   | 6,028   |  
|Cost of services                             |  |                 | (10,131 | ) |                 |   | (16,240 | )
|Inventorynon-cash adjustments               |  |                 |        |   |                 |   | (223    | )
|                                             |  |                 |         |   |                 |   |         |  
|Cost of goods and services sold              |  |                 | (13,599 | ) |                 |   | (23,956 | )
|Reclamation asset amortization               |  |                 | (32     | ) |                 |   | (12     | )
|Reclamation liability adjustments            |  |                 | (762    | ) |                 |   | (2,732  | )
|Post-employment experience gain amortization |  |                 | 22      |   |                 |   | 23      |  
|Selling expenses                             |  |                 |        |   |                 |   | (126    | )
|Sales royalties and capital taxes            |  |                 | 9       |   |                 |   | (112    | )
|                                             |  |                 |         |   |                 |   |         |  
|Operating expenses                           |  | $               | (14,362 | ) |                 | $ | (26,915 | )
|                                             |  |                 |         |   |                 |   |         |  

The components of other income (expense) from continuing operations are as follows:



|                                            |  |                 |        |   |                 |   |        |  
|------------------------------------------- |  | --------------- | ------ | - | --------------- | - | ------ | -
|                                            |  | Year Ended      |       
|(in thousands)                              |  | December 312012 |        |   | December 312011 |  
|Gains (losses) on:                          |  |                 |        |   |                 |   |        |  
|Foreign exchange                            |  | $               | (2,526 | ) |                 | $ | (1,108 | )
|Disposal of property, plant and equipment   |  |                 | 67     |   |                 |   | 343    |  
|Investment impairments                      |  |                 | (64    | ) |                 |   | (896   | )
|Investment fair value through profit (loss) |  |                 | 523    |   |                 |   |       |  
|Restructuring of GSJV (see note 11)         |  |                 | (742   | ) |                 |   |       |  
|Other                                       |  |                 | 66     |   |                 |   | (243   | )
|                                            |  |                 |        |   |                 |   |        |  
|Other income (expense)                      |  | $               | (2,676 | ) |                 | $ | (1,904 | )
|                                            |  |                 |        |   |                 |   |        |  



- 31 -



---

The components of finance income (expense) from continuing operations are as follows:



|                                           |  |                 |      |   |                 |   |      |  
|------------------------------------------ |  | --------------- | ---- | - | --------------- | - | ---- | -
|                                           |  | Year Ended      |     
|(in thousands)                             |  | December 312012 |      |   | December 312011 |  
|Interest income                            |  | $               | 483  |   |                 | $ | 898  |  
|Interest expense                           |  |                 | (7   | ) |                 |   | 9    |  
|Accretion expense-reclamation obligations  |  |                 | (794 | ) |                 |   | (730 | )
|Accretion expense-post-employment benefits |  |                 | (132 | ) |                 |   | (285 | )
|                                           |  |                 |      |   |                 |   |      |  
|Finance income (expense)                   |  | $               | (450 | ) |                 | $ | (108 | )
|                                           |  |                 |      |   |                 |   |      |  

A summary of depreciation expense recognized in the statement of income (loss) from continuing operations
is as follows:



|                                  |  |                 |      |   |                 |   |        |  
|--------------------------------- |  | --------------- | ---- | - | --------------- | - | ------ | -
|                                  |  | Year Ended      |     
|(in thousands)                    |  | December 312012 |      |   | December 312011 |  
|Operating expenses:               |  |                 |      |   |                 |   |        |  
|Mining, other development expense |  | $               | (316 | ) |                 | $ | (322   | )
|Milling, conversion expense       |  |                 | (39  | ) |                 |   | (88    | )
|Cost of services                  |  |                 | (311 | ) |                 |   | (411   | )
|Mineral property exploration      |  |                 | (96  | ) |                 |   | (121   | )
|General and administrative        |  |                 | (86  | ) |                 |   | (131   | )
|                                  |  |                 |      |   |                 |   |        |  
|Depreciation expensegross        |  | $               | (848 | ) |                 | $ | (1,073 | )
|                                  |  |                 |      |   |                 |   |        |  

A summary of employee benefits expense recognized in the statement of income (loss) for continuing
operations is as follows:



|                                          |  |                 |         |   |                 |   |         |  
|----------------------------------------- |  | --------------- | ------- | - | --------------- | - | ------- | -
|                                          |  | Year Ended      |        
|(in thousands)                            |  | December 312012 |         |   | December 312011 |  
|Salaries and short-term employee benefits |  | $               | (10,135 | ) |                 | $ | (10,572 | )
|Share-based compensation                  |  |                 | (1,591  | ) |                 |   | (2,151  | )
|Termination benefits                      |  |                 | (1,054  | ) |                 |   |        |  
|                                          |  |                 |         |   |                 |   |         |  
|Employee benefits expense                 |  | $               | (12,780 | ) |                 | $ | (12,723 | )
|                                          |  |                 |         |   |                 |   |         |  



- 32 -



---

The change in non-cash working capital items in the consolidated statements of cash flows is
as follows:



|                                          |  |                 |         |   |                 |   |         |  
|----------------------------------------- |  | --------------- | ------- | - | --------------- | - | ------- | -
|                                          |  | Year Ended      |        
|(in thousands)                            |  | December 312012 |         |   | December 312011 |  
|Change in non-cash working capital items: |  |                 |         |   |                 |   |         |  
|Trade and other receivables               |  | $               | 9,449   |   |                 | $ | 6,758   |  
|Inventories                               |  |                 | (14,025 | ) |                 |   | (23,304 | )
|Prepaid expenses and other assets         |  |                 | 1,314   |   |                 |   | (629    | )
|Accounts payable and accrued liabilities  |  |                 | 3,296   |   |                 |   | (5,667  | )
|Post-employment benefits                  |  |                 | (235    | ) |                 |   | (304    | )
|Reclamation obligations                   |  |                 | (797    | ) |                 |   | (812    | )
|Deferred revenue                          |  |                 | 257     |   |                 |   | (2,446  | )
|                                          |  |                 |         |   |                 |   |         |  
|Change in non-cash working capital items  |  | $               | (741    | ) |                 | $ | (26,404 | )
|                                          |  |                 |         |   |                 |   |         |  



|23. | SEGMENTED INFORMATION
|--- | ---------------------

Business Segments

The Company operates in two primary segments  the Mining segment and the Services and Other segment. The Mining segment, which has been further subdivided by major geographic regions, includes
activities related to exploration, evaluation and development, mining, milling and the sale of mineral concentrates. The Services and Other segment includes the results of the Companys environmental services business, management fees and
commission income earned from UPC and other customers and general corporate expenses not allocated to the other segments.

For
the year ended December 31, 2012, business segment results from continuing operations were as follows:



|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|------------------------------- |  | ------------ | ------- | - | ---------- |  | ------ | ------------ |  |  | ----------------- | - |  | ----- | ------- | - |  |  | ------- | -
|(in thousands)                  |  | CanadaMining |         |   | AsiaMining |  |        | AfricaMining |  |  | Servicesand Other |   |  | Total |        
|Statement of Operations:        |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Revenues                        |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 11,127  |   |  |  | 11,127  |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Expenses:                       |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Operating expenses              |  |              | (4,153  | ) |            |  |       |              |  |  | (78               | ) |  |       | (10,131 | ) |  |  | (14,362 | )
|Mineral property exploration    |  |              | (5,725  | ) |            |  | (3,156 | )            |  |  | (3,627            | ) |  |       |        |   |  |  | (12,508 | )
|General and administrative      |  |              |        |   |            |  | (788   | )            |  |  | (1,115            | ) |  |       | (8,572  | ) |  |  | (10,475 | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              | (9,878  | ) |            |  | (3,944 | )            |  |  | (4,820            | ) |  |       | (18,703 | ) |  |  | (37,345 | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Segment income (loss)           |  |              | (9,878  | ) |            |  | (3,944 | )            |  |  | (4,820            | ) |  |       | (7,576  | ) |  |  | (26,218 | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Revenues  supplemental:        |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Environmental services          |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 9,456   |   |  |  | 9,456   |  
|Management fees and commissions |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 1,671   |   |  |  | 1,671   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 11,127  |   |  |  | 11,127  |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Capital additions: (1)          |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Property, plant and equipment   |  |              | 1,348   |   |            |  | 236    |              |  |  | 2,165             |   |  |       | 325     |   |  |  | 4,074   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Long-lived assets:              |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Plant and equipment             |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Cost                            |  |              | 93,104  |   |            |  | 600    |              |  |  | 1,217             |   |  |       | 4,426   |   |  |  | 99,347  |  
|Accumulated depreciation        |  |              | (9,119  | ) |            |  | (410   | )            |  |  | (713              | ) |  |       | (1,901  | ) |  |  | (12,143 | )
|Mineral properties              |  |              | 74,041  |   |            |  | 8,337  |              |  |  | 78,306            |   |  |       |        |   |  |  | 160,684 |  
|Intangibles                     |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 2,008   |   |  |  | 2,008   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              | 158,026 |   |            |  | 8,527  |              |  |  | 78,810            |   |  |       | 4,533   |   |  |  | 249,896 |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  



|(1) | In June 2012, the Company divested its U.S. Mining Division (see note 5). The capital additions amount reported above excludes $10,450,000 of capital additions
attributable to the former U.S. mining segment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



- 33 -



---

For the year ended December 31, 2011, business segment results from continuing
operations were as follows:



|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|------------------------------- |  | ------------ | ------- | - | ---------- |  | ------ | ------------ |  |  | ----------------- | - |  | ----- | ------- | - |  |  | ------- | -
|(in thousands)                  |  | CanadaMining |         |   | AsiaMining |  |        | AfricaMining |  |  | Servicesand Other |   |  | Total |        
|Statement of Operations:        |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Revenues                        |  |              | 7,693   |   |            |  |       |              |  |  |                  |   |  |       | 18,103  |   |  |  | 25,796  |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Expenses:                       |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Operating expenses              |  |              | (10,618 | ) |            |  |       |              |  |  | (32               | ) |  |       | (16,265 | ) |  |  | (26,915 | )
|Mineral property exploration    |  |              | (6,783  | ) |            |  | (3,971 | )            |  |  | (2,396            | ) |  |       |        |   |  |  | (13,150 | )
|General and administrative      |  |              |        |   |            |  | (891   | )            |  |  | (1,035            | ) |  |       | (7,975  | ) |  |  | (9,901  | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              | (17,401 | ) |            |  | (4,862 | )            |  |  | (3,463            | ) |  |       | (24,240 | ) |  |  | (49,966 | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Segment income (loss)           |  |              | (9,708  | ) |            |  | (4,862 | )            |  |  | (3,463            | ) |  |       | (6,137  | ) |  |  | (24,170 | )
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Revenues  supplemental:        |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Uranium concentrates            |  |              | 7,693   |   |            |  |       |              |  |  |                  |   |  |       |        |   |  |  | 7,693   |  
|Environmental services          |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 16,190  |   |  |  | 16,190  |  
|Management fees and commissions |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 1,913   |   |  |  | 1,913   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              | 7,693   |   |            |  |       |              |  |  |                  |   |  |       | 18,103  |   |  |  | 25,796  |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Capital additions: (1)          |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Property, plant and equipment   |  |              | 732     |   |            |  | 610    |              |  |  | 1,650             |   |  |       | 1,090   |   |  |  | 4,082   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Long-lived assets:              |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Plant and equipment             |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|Cost                            |  |              | 90,048  |   |            |  | 485    |              |  |  | 968               |   |  |       | 4,176   |   |  |  | 95,677  |  
|Accumulated depreciation        |  |              | (8,676  | ) |            |  | (388   | )            |  |  | (630              | ) |  |       | (1,662  | ) |  |  | (11,356 | )
|Mineral properties              |  |              | 72,094  |   |            |  | 8,222  |              |  |  | 77,975            |   |  |       |        |   |  |  | 158,291 |  
|Intangibles                     |  |              |        |   |            |  |       |              |  |  |                  |   |  |       | 2,838   |   |  |  | 2,838   |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  
|                                |  |              | 153,466 |   |            |  | 8,319  |              |  |  | 78,313            |   |  |       | 5,352   |   |  |  | 245,450 |  
|                                |  |              |         |   |            |  |        |              |  |  |                   |   |  |       |         |   |  |  |         |  



|(1) | In June 2012, the Company divested its U.S. Mining Division (see note 5). The capital additions amount reported above excludes $23,644,000 of capital additions
attributable to the former U.S. mining segment.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Revenue Concentration

The Companys business from continuing operations is such that, at any given time, it sells its uranium concentrates and other
services with a relatively small number of customers. During 2012, three customers from the services and other segment accounted for approximately 86% of total revenues consisting of 46%, 25% and 15% individually. In 2011, one customer from the
mining segment and two customers from the services and other segment accounted for approximately 88% of total revenues consisting of 39%, 30% and 19% individually.



|24. | RELATED PARTY TRANSACTIONS
|--- | --------------------------

Uranium Participation Corporation

The Company is a party to a management services agreement with UPC. Under the terms of the agreement, the Company receives the following fees from UPC: 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 between CAD$100,000,000 and CAD$200,000,000 and 0.2% per annum based upon UPCs net asset value in excess of CAD$200,000,000; c) a fee of CAD$200,000 upon the completion of each equity financing where proceeds to UPC exceed
CAD$20,000,000; d) a fee of CAD$200,000 for each transaction or arrangement (other than the purchase or sale of uranium) of business where the gross value of such transaction exceeds CAD$20,000,000 (an initiative); e) an annual fee up to
a maximum of CAD$200,000, at the discretion of the Board of Directors of UPC, for on-going maintenance or work associated with an initiative; and f) a fee equal to 1.5% of the gross value of any uranium held by UPC prior to the completion of any
acquisition of at least 90% of the common shares of UPC.



- 34 -



---

In accordance with the management services agreement, all uranium investments owned by UPC
are held in accounts with conversion facilities in the name of DMI as manager for and on behalf of UPC.

From time to time, the
Company has also provided temporary revolving credit facilities to UPC which generate interest and standby fee income and sold uranium concentrates to UPC.

The following transactions were incurred with UPC for the periods noted:



|                                |  |                 |       |  |                 |   |       | 
|------------------------------- |  | --------------- | ----- |  | --------------- | - | ----- | 
|                                |  | Year Ended      |      
|(in thousands)                  |  | December 312012 |       |  | December 312011 |  
|Revenue:                        |  |                 |       |  |                 |   |       | 
|Management fees                 |  | $               | 1,671 |  |                 | $ | 1,913 | 
|Commission and transaction fees |  |                 |      |  |                 |   |      | 
|                                |  |                 |       |  |                 |   |       | 
|                                |  | $               | 1,671 |  |                 | $ | 1,913 | 
|                                |  |                 |       |  |                 |   |       | 

At December 31, 2012, accounts receivable includes $143,000 (December 31, 2011: $226,000) due from
UPC with respect to the fees and transactions indicated above.

On January 3, 2011, the U.S. Mining
Division borrowed 150,000 pounds of U3O8from UPC pursuant to a uranium concentrate loan agreement between the
parties. As collateral for the loan, the Company issued an irrevocable standby-letter of credit in favour of UPC in the amount of $12,045,000. On March 30, 2011, the U.S. Mining Division repaid 150,000 pounds of U3O8to UPC. Loan fees incurred by the U.S. Mining Division under the agreement were $91,000. In 2011, the loan fees have been
paid and the irrevocable standby-letter of credit has been cancelled.

Korea Electric Power Corporation (KEPCO)

In June 2009, Denison completed definitive agreements with KEPCO. The agreements included a long-term
offtake agreement which provides for the delivery to KEPCO of 20% of Denisons annual U3O8production
(±10%) but not less than 350,000 pounds (±10%) per year from 2010 to 2015 inclusive. This long-term offtake agreement has been assigned to EFR as part of the U.S. Mining Division transaction (see note 5).

KEPCO also entered into a strategic relationship agreement. Pursuant to this agreement, KEPCO is entitled to subscribe for additional
common shares in Denisons future share offerings. In addition, KEPCO is entitled to designate two persons to be nominated to Denisons board of directors if it maintains at least a 15% share interest in Denison, which is permanently
reduced to one board of director nomination if KEPCOs share interest falls to between 5% and 15%.

The strategic
relationship agreement also provides KEPCO with a right of first opportunity if Denison intends to sell any of its substantial assets and a right to participate in certain purchases of substantial assets which Denison proposes to acquire.

As at December 31, 2012, KEPCOs holds 58,000,000 shares of Denison representing a share interest of approximately
14.92%. Under the terms of the strategic relationship agreement, KEPCO is now only entitled to nominate one director to Denisons board of directors.

Other

During 2012, the Company has incurred management and administrative
service fees and other expenses of $75,000 (2011: $176,000) with a company owned by the Chairman of the Company which provides corporate development, office premises, secretarial and other services. At December 31, 2012, an amount of $nil
(December 31, 2011: $nil) was due to this company.

During 2012, the Company has incurred legal fees of $299,000 from a law
firm of which a director of the Company is a partner. At December 31, 2012, an amount of $285,000 is due to this legal firm.

During 2012, the Company has incurred fees of $52,000 for air chartered services from a company owned by the Chairman of the Company. At December 31, 2012, an amount of $nil is due to this company.



- 35 -



---

Compensation of Key Management Personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of
the Company, directly or indirectly. Key management personnel includes the Companys executive officers, vice-presidents and members of its Board of Directors.

The following compensation was awarded to key management personnel:



|                                          |  |                 |       |  |                 |   |       | 
|----------------------------------------- |  | --------------- | ----- |  | --------------- | - | ----- | 
|                                          |  | Year Ended      |      
|(in thousands)                            |  | December 312012 |       |  | December 312011 |  
|Salaries and short-term employee benefits |  | $               | 1,614 |  |                 | $ | 2,210 | 
|Share-based compensation                  |  |                 | 1,127 |  |                 |   | 1,872 | 
|Termination benefits                      |  |                 | 867   |  |                 |   |      | 
|                                          |  |                 |       |  |                 |   |       | 
|Key management personnel compensation     |  | $               | 3,608 |  |                 | $ | 4,082 | 
|                                          |  |                 |       |  |                 |   |       | 



|25. | CAPITAL MANAGEMENT AND FINANCIAL RISK
|--- | -------------------------------------

Capital Management

The Companys capital includes cash and cash
equivalents and debt obligations. The Companys primary objective with respect to its capital management is to ensure that it has sufficient capital to maintain its ongoing operations, to provide returns for shareholders and benefits for other
stakeholders and to pursue growth opportunities.

Planning, annual budgeting and controls over major investment decisions are
the primary tools used to manage the Companys capital. The Companys cash is managed centrally and disbursed to the various regions via a system of cash call requests which are reviewed by the key decision makers. Under the Companys
delegation of authority guidelines, significant debt obligations require the approval of both the CEO and the CFO before they are entered into.

The Company manages its capital by review of the following measure:



|                             |  |                    |        |   |                    |   |        |  
|---------------------------- |  | ------------------ | ------ | - | ------------------ | - | ------ | -
|(in thousands)               |  | At December 312012 |        |   | At December 312011 |  
|Net cash:                    |  |                    |        |   |                    |   |        |  
|Cash and cash equivalents    |  | $                  | 38,188 |   |                    | $ | 53,515 |  
|Debt obligations  current   |  |                    | (125   | ) |                    |   | (111   | )
|Debt obligations  long term |  |                    | (104   | ) |                    |   | (110   | )
|                             |  |                    |        |   |                    |   |        |  
|Net cash                     |  |                    | 37,959 |   |                    |   | 53,294 |  
|                             |  |                    |        |   |                    |   |        |  

Financial Risk

The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of those risks. These risks may include credit risk, liquidity risk, currency risk, interest
rate risk and price risk.



| | (a) | Credit Risk
| | --- | -----------

Credit risk
is the risk of loss due to a counterpartys inability to meet its obligations under a financial instrument that will result in a financial loss to the Company. The Company believes that the carrying amount its cash and cash equivalents, trade
and other receivables and restricted cash and investments represents its maximum credit exposure.



- 36 -



---

The maximum exposure to credit risk at the reporting dates is as follows:



|                                |  |                    |        |  |                    |   |        | 
|------------------------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | 
|(in thousands)                  |  | At December 312012 |        |  | At December 312011 |  
|Cash and cash equivalents       |  | $                  | 38,188 |  |                    | $ | 53,515 | 
|Trade and other receivables     |  |                    | 2,638  |  |                    |   | 12,652 | 
|Restricted cash and investments |  |                    | 2,254  |  |                    |   | 26,793 | 
|                                |  |                    |        |  |                    |   |        | 
|                                |  | $                  | 43,080 |  |                    | $ | 92,960 | 
|                                |  |                    |        |  |                    |   |        | 

The Company limits cash and cash equivalent and restricted cash and investment risk by dealing with credit
worthy financial institutions.

The Companys trade and other receivables balance relates to a small number of customers
who are credit worthy and with whom the Company has established a relationship with through its past dealings.



| | (b) | Liquidity Risk
| | --- | --------------

Liquidity
risk is the risk that the Company will encounter difficulties in meeting obligations associated with its financial liabilities as they become due. The Company has in place a planning and budgeting process to help determine the funds required to
support the Companys normal operating requirements on an ongoing basis. The Company ensures that there is sufficient committed capital to meet its short-term business requirements, taking into account its anticipated cash flows from
operations, its holdings of cash and cash equivalents and its access to credit facilities, if required.

The maturities of the
Companys financial liabilities are as follows:



|                                         |  |              |       |  |             |   |     | 
|---------------------------------------- |  | ------------ | ----- |  | ----------- | - | --- | 
|(in thousands)                           |  | Within 1Year |       |  | 1 to 5Years |  
|Accounts payable and accrued liabilities |  | $            | 6,628 |  |             | $ |    | 
|Debt obligations (Note 15)               |  |              | 125   |  |             |   | 104 | 
|                                         |  |              |       |  |             |   |     | 
|                                         |  | $            | 6,753 |  |             | $ | 104 | 
|                                         |  |              |       |  |             |   |     | 



| | (c) | Currency Risk
| | --- | -------------

Foreign
exchange risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company operates internationally and is exposed to foreign exchange risk arising from
various currency exposures as its subsidiaries incur operating and capital costs denominated in local currencies. Foreign exchange risk also arises from assets and liabilities that are denominated in a currency that is not the functional currency
for the relevant subsidiary company.

Currently, the Company does not have any foreign exchange hedge programs in place and
manages its operational foreign exchange requirements through spot purchases in the foreign exchange markets.

The impact of
the U.S dollar strengthening at December 31, 2012 against the Companys foreign currencies, with all other variables held constant, is as follows:



|                                             |  |                                   |          |  |                                   |  |          |                           |  |   |        |  
|-------------------------------------------- |  | --------------------------------- | -------- |  | --------------------------------- |  | -------- | ------------------------- |  | - | ------ | -
|(in thousands except foreign exchange rates) |  | Dec.312012Foreign Ex-Change Rate |          |  | SensitivityForeign Ex-Change Rate |  |          | Change innet income(loss) | 
|Currency risk                                |  |                                   |          |  |                                   |  |          |                           |  |   |        |  
|Canadian dollar (CAD)                      |  |                                   | 0.9949   |  |                                   |  | 1.1055   |                           |  | $ | 8,763  |  
|Zambian kwacha (ZMK)                       |  |                                   | 5,285.41 |  |                                   |  | 5,813.95 |                           |  |   | (4,383 | )
|Mongolian tugrog (MNT)                     |  |                                   | 1,380.07 |  |                                   |  | 1,518.08 |                           |  |   | (3,610 | )
|                                             |  |                                   |          |  |                                   |  |          |                           |  |   |        |  
|                                             |  |                                   |          |  |                                   |  |          |                           |  | $ | 770    |  
|                                             |  |                                   |          |  |                                   |  |          |                           |  |   |        |  



| | (d) | Interest Rate Risk
| | --- | ------------------

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market interest rates. The Company is exposed to interest rate risk on its liabilities through its outstanding borrowings and on its assets through its investments in debt instruments. The Company monitors its exposure to interest rates and has not
entered into any derivative contracts to manage this risk.



- 37 -



---

| | (e) | Price Risk
| | --- | ----------

The Company
is exposed to equity price risk as a result of holding equity investments in other exploration and mining companies. The Company does not actively trade these investments. The sensitivity analysis below has been determined based on the exposure to
equity price risk at December 31, 2012:



|                              |  |                           |     |  |                                     |   |     | 
|----------------------------- |  | ------------------------- | --- |  | ----------------------------------- | - | --- | 
|(in thousands)                |  | Change innet income(loss) |     |  | Change incomprehensiveincome
(loss) |  
|Equity price risk             |  |                           |     |  |                                     |   |     | 
|10% increase in equity prices |  | $                         | 233 |  |                                     | $ | 284 | 
|                              |  |                           |     |  |                                     |   |     | 

Fair Value of Financial Instruments

IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes
the inputs to fair value measurement. The three levels of the fair value hierarchy are:



| |  | Level 1  Unadjusted quoted prices in active markets for identical assets or liabilities;
| | - | -----------------------------------------------------------------------------------------



| |  | Level 2  Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
| | - | ---------------------------------------------------------------------------------------------------------------------------



| |  | Level 3  Inputs that are not based on observable market data.
| | - | --------------------------------------------------------------

The fair value of financial instruments which trade in active markets (such as available-for-sale securities) is based on quoted market prices at the balance sheet date. The quoted marked price used to
value financial assets held by the Company is the current bid price.

Except as otherwise disclosed, the fair values of cash
and cash equivalents, trade and other receivables, accounts payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their carrying values as a result of the short-term nature of the instruments, or the
variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.

The following table illustrates the classification of the Companys financial assets within the fair value hierarchy as at December 31, 2012:



|                                        |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|--------------------------------------- |  | --------------------- | ---------- |  | -------------- |  | ------- | ----------------- |  | - | ------------- |  |  | - | ------ | 
|                                        |  | Financial             |            |  | Fair           |  |         | December 31, 2012 | 
|(in thousands)                          |  | InstrumentCategory(1) |            |  | ValueHierarchy |  |         | FairValue         |  |   | CarryingValue | 
|Financial Assets:                       |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|Cash and equivalents                    |  |                       | Category D |  |                |  |         |                   |  | $ | 38,188        |  |  | $ | 38,188 | 
|Trade and other receivables             |  |                       | Category D |  |                |  |         |                   |  |   | 2,638         |  |  |   | 2,638  | 
|Investments                             |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|Equity instruments                      |  |                       | Category A |  |                |  | Level 1 |                   |  |   | 2,332         |  |  |   | 2,332  | 
|Equity instruments                      |  |                       | Category B |  |                |  | Level 1 |                   |  |   | 511           |  |  |   | 511    | 
|Restricted cash and equivalents         |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|Elliot Lake reclamation trust fund      |  |                       | Category C |  |                |  |         |                   |  |   | 2,254         |  |  |   | 2,254  | 
|                                        |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|                                        |  |                       |            |  |                |  |         |                   |  | $ | 45,923        |  |  | $ | 45,923 | 
|                                        |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|Financial Liabilities:                  |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|Account payable and accrued liabilities |  |                       | Category E |  |                |  |         |                   |  |   | 6,628         |  |  |   | 6,628  | 
|Debt obligations                        |  |                       | Category E |  |                |  |         |                   |  |   | 229           |  |  |   | 229    | 
|                                        |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 
|                                        |  |                       |            |  |                |  |         |                   |  | $ | 6,857         |  |  | $ | 6,857  | 
|                                        |  |                       |            |  |                |  |         |                   |  |   |               |  |  |   |        | 



|(1) | Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category B=Available for sale
investments; Category C=Held to maturity investments; Category D=Loans and receivables; and Category E=Financial liabilities at amortized cost.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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---

|26. | COMMITMENTS AND CONTINGENCIES
|--- | -----------------------------

General Legal Matters

The Company is involved, from time to time, in
various legal actions and claims in the ordinary course of business. In the opinion of management, the aggregate amount of any potential liability is not expected to have a material adverse effect on the Companys financial position or results.

Third Party Indemnities

The Company remains a guarantor under a sales contract included in the sale of the U.S. Mining Division to EFR. The sales contract requires deliveries of 200,000 pounds of U3O8per year from 2013 to 2017 at a selling price of 95% of the long-term U3O8price at the time of delivery. Should EFR not be able to deliver for any reason other than force majeure as
defined under the contract, the Company may be liable to the customer for incremental costs incurred to replace the contracted quantities if the unit price of the replacement quantity is greater than the contracted unit price selling amount. EFR has
agreed to indemnify the Company for any future liabilities it may incur related to this guarantee.

The Company has agreed to
indemnify EFR against any future liabilities it may incur in connection with ongoing litigation between Denison Mines (USA) Corp (DUSA) (a company acquired by EFR as part of the sale of the U.S. Mining Division) and a contractor in
respect of a construction project at the White Mesa mill. The outcome of this proceeding has yet to be determined; however, an adverse decision may have a material impact on the Company. In the event that the matter is decided in DUSAs favour,
the Company is entitled to any proceeds that are received or recovered by EFR pursuant to its indemnity.

Performance Bonds
and Letters of Credit

In conjunction with various contracts, reclamation and other performance obligations, the Company
may be required to issue performance bonds and letters of credit as security to creditors to guarantee the Companys performance. Any potential payments which might become due under these items would be related to the Companys
non-performance under the applicable contract. As at December 31, 2012, the Company had outstanding bonds and letters of credit of $9,748,000 of which $9,748,000 is collateralized by a reduction in the Companys line of credit limit
available for general corporate purposes (see note 15).

Others

The Company has committed to payments under various operating leases and other commitments. The future minimum payments are as follows:



|                    |  |   |       | 
|------------------- |  | - | ----- | 
|(in thousands)      |  |   |      
|2013                |  | $ | 404   | 
|2014                |  |   | 317   | 
|2015                |  |   | 236   | 
|2016                |  |   | 97    | 
|2017                |  |   | 16    | 
|2018 and thereafter |  |   |      | 
|                    |  |   |       | 
|                    |  | $ | 1,070 | 
|                    |  |   |       | 



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|27. | SUBSEQUENT EVENTS
|--- | -----------------

On
January 31, 2013, Denison closed its previously announced plan of arrangement (the JNR Arrangement) to acquire all of the outstanding common shares of JNR Resources Inc. (JNR). Pursuant to the JNR Arrangement, the former
shareholders of JNR received, for each JNR common share held, 0.073 of a Denison common share (the Exchange Ratio). All of the outstanding options and common share purchase warrants of JNR were exchanged for options and warrants to
purchase common shares of Denison with a number and exercise price determined by reference to the Exchange Ratio. On closing, Denison issued 7,975,479 common shares with a value of approximately CAD$10,900,000.

On January 16, 2013, Denison announced the signing of a Binding Letter of Intent to acquire a portfolio of assets from Fission Energy
Corp. (Fission) which include its 60% interest in the Waterbury Lake uranium project, its interests in all other properties in the eastern part of the Athabasca Basin, Quebec and Nunavut and its interests in two joint ventures in Namibia
(collectively, the Assets). Denison entered into an arrangement agreement with Fission on March 7, 2013 (the Fission Arrangement). Under the terms of the Fission Arrangement, Denison will offer shareholders of Fission
0.355 shares of Denison for each Fission share held. The completion of the transaction is conditional upon, among other things, certain assets of Fission being spun out to a new company. Denison expects to issue approximately 49,200,000 common
shares to complete the acquisition, which values the Assets at approximately CAD$62,500,000 based on Denisons closing share price of CAD$1.27 per share on March 6, 2013.



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