Exhibit 99.3




---



##### 



Responsibility for Financial Statements
     E. Peter Farmer
    
    James R. AndersonE. Peter Farmer
    
    James R. AndersonChief Executive Officer
    
    Executive Vice-President andChief Financial OfficerMarch 18, 2009
 Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework
  Changes to Internal Control over Financial Reporting




---



##### 



Independent Auditors Report
 To the Shareholders of Denison Mines Corp.
  Consolidated Financial Statements
    Internal Control over Financial Reporting
 Internal Control  Integrated Framework
   - 2 -




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##### 



PricewaterhouseCoopers LLP
 Chartered Accountants, Licensed Public Accountants
 Comments by Auditors for US Readers on Canada  US Reporting Differences
  PricewaterhouseCoopers LLP
 Chartered Accountants, Licensed Public Accountants
  - 3 -




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##### 



DENISON MINES CORP.
 December 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrentCash and equivalents
    
    $
    3,206
    
    
    $
    19,680Trade and other receivables
    
    
    12,894
    
    
    
    39,667Note receivables
    
    
    181
    
    
    
    455Inventories (Note 5)
    
    
    44,733
    
    
    
    30,921Investments (Note 6)
    
    
    
    
    
    
    13,930Prepaid expenses and other
    
    
    1,275
    
    
    
    1,49262,289
    
    
    
    106,145Inventories  ore in stockpiles (Note 5)
    
    
    5,016
    
    
    
    Investments (Note 6)
    
    
    10,691
    
    
    
    20,507Property, plant and equipment, net (Note 7)
    
    
    717,433
    
    
    
    727,823Restricted cash and equivalents (Note 8)
    
    
    21,286
    
    
    
    17,797Intangibles (Note 9)
    
    
    4,978
    
    
    
    6,979Goodwill (Note 10)
    
    
    63,240
    
    
    
    122,330$
    884,933
    
    
    $
    1,001,581LIABILITIESCurrentAccounts payable and accrued liabilities
    
    $
    23,787
    
    
    $
    22,642Current portion of long-term liabilities:Post-employment benefits (Note 11)
    
    
    329
    
    
    
    404Reclamation and remediation obligations (Note 12)
    
    
    875
    
    
    
    565Debt obligations (Note 13)
    
    
    464
    
    
    
    42Other long-term liabilities (Note 14)
    
    
    2,179
    
    
    
    6,57727,634
    
    
    
    30,230Deferred revenue
    
    
    2,913
    
    
    
    2,359Provision for post-employment benefits (Note 11)
    
    
    3,028
    
    
    
    4,030Reclamation and remediation obligations (Note 12)
    
    
    18,471
    
    
    
    19,824Debt obligations (Note 13)
    
    
    99,290
    
    
    
    Other long-term liabilities (Note 14)
    
    
    1,191
    
    
    
    7,343Future income tax liability (Note 15)
    
    
    124,054
    
    
    
    141,525276,581
    
    
    
    205,311SHAREHOLDERS EQUITYShare capital (Note 16)
    
    
    666,278
    
    
    
    662,949Share purchase warrants (Note 17)
    
    
    11,728
    
    
    
    11,728Contributed surplus (Notes 18 and 19)
    
    
    30,537
    
    
    
    25,471Deficit
    
    
    (95,482
    )
    
    
    (14,834
    )Accumulated other comprehensive income (loss) (Note 20)
    
    
    (4,709
    )
    
    
    110,956(100,191
    )
    
    
    96,122608,352
    
    
    
    796,270$
    884,933
    
    
    $
    1,001,581Issued and outstanding common shares (Note 16)
    
    
    197,295,415
    
    
    
    189,731,635
 
 On Behalf of the Board of Directors:
 E. Peter Farmer

Director
    
    Catherine J. G. Stefan

Director
   - 4 -




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##### 



DENISON MINES CORP.
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2008
    
    
    2007REVENUES(Note 22)
    
    $
    123,184
    
    
    $
    76,764EXPENSESOperating expenses
    
    
    118,069
    
    
    
    47,038Sales royalties and capital taxes
    
    
    3,117
    
    
    
    2,301Mineral property exploration
    
    
    20,114
    
    
    
    20,727General and administrative
    
    
    14,754
    
    
    
    12,323Stock option expense (Note 19)
    
    
    6,062
    
    
    
    1,382Goodwill impairment (Note 10)
    
    
    36,512
    
    
    
    198,628
    
    
    
    83,771Loss from operations
    
    
    (75,444
    )
    
    
    (7,007
    )Other income, net (Note 21)
    
    
    2,468
    
    
    
    41,627Income (loss) before taxes
    
    
    (72,976
    )
    
    
    34,620Income tax recovery (expense) (Note 15):Current
    
    
    899
    
    
    
    (3,141
    )Future
    
    
    (8,571
    )
    
    
    15,765Net income (loss) for the year
    
    $
    (80,648
    )
    
    $
    47,244Deficit, beginning of year
    
    $
    (14,834
    )
    
    $
    (62,078
    )Deficit, end of year
    
    $
    (95,482
    )
    
    $
    (14,834
    )Net income (loss) for the year
    
    $
    (80,648
    )
    
    $
    47,244Change in unrealized gain (loss) on investments
    
    
    (17,884
    )
    
    
    (6,742
    )Change in foreign currency translation
    
    
    (97,781
    )
    
    
    101,354Comprehensive income (loss) for the year
    
    $
    (196,313
    )
    
    $
    141,856Net income (loss) per shareBasic
    
    $
    (0.42
    )
    
    $
    0.25Diluted
    
    $
    (0.42
    )
    
    $
    0.24Weighted-average number of shares outstanding (in thousands)Basic
    
    
    190,218
    
    
    
    188,722Diluted
    
    
    190,218
    
    
    
    193,613
    - 5 -




---



##### 



DENISON MINES CORP.
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,CASH PROVIDED BY (USED IN):
    
    2008
    
    
    2007OPERATING ACTIVITIESNet income (loss) for the year
    
    $
    (80,648
    )
    
    $
    47,244Items not affecting cash:Depletion, depreciation, amortization and accretion
    
    
    39,588
    
    
    
    13,386Goodwill impairment charge
    
    
    36,512
    
    
    
    Investment impairment charge
    
    
    12,952
    
    
    
    Stock-based compensation
    
    
    6,062
    
    
    
    1,382Losses (gains) on asset disposals
    
    
    (181
    )
    
    
    (45,119
    )Losses (gains) on restricted investments
    
    
    (1,176
    )
    
    
    (327
    )Write-downs and other non-cash
    
    
    9,748
    
    
    
    2,425Change in future income taxes
    
    
    8,571
    
    
    
    (15,765
    )Foreign exchange
    
    
    (15,544
    )
    
    
    Net change in non-cash working capital
items (Note 25)
    
    
    (24,648
    )
    
    
    (26,310
    )Net cash used in operating activities
    
    
    (8,764
    )
    
    
    (23,084
    )INVESTING ACTIVITIESAcquisition of businesses, net of cash and equivalents
acquired (Note 4)
    
    
    
    
    
    
    (158,583
    )Decrease in notes receivable
    
    
    274
    
    
    
    9,778Purchase of long-term investments
    
    
    (13,376
    )
    
    
    (1,458
    )Proceeds from sale of long-term investments
    
    
    1,316
    
    
    
    52,870Expenditures on property, plant and equipment
    
    
    (101,227
    )
    
    
    (59,578
    )Proceeds from sale of property, plant and equipment
    
    
    4
    
    
    
    33Increase in restricted investments
    
    
    (2,697
    )
    
    
    (1,531
    )Net cash used in investing activities
    
    
    (115,706
    )
    
    
    (158,469
    )FINANCING ACTIVITIESIncrease (decrease) in debt obligations
    
    
    99,547
    
    
    
    (50
    )Issuance of common shares for cash:New share issues
    
    
    6,073
    
    
    
    102,151Exercise of stock options and warrants
    
    
    1,527
    
    
    
    5,114Net cash provided by financing activities
    
    
    107,147
    
    
    
    107,215Net decrease in cash and equivalents
    
    
    (17,323
    )
    
    
    (74,338
    )Foreign exchange effect on cash and equivalents
    
    
    849
    
    
    
    24,891Cash and equivalents, beginning of year
    
    
    19,680
    
    
    
    69,127Cash and equivalents, end of year
    
    $
    3,206
    
    
    $
    19,680Cash and cash equivalents comprised of:Cash
    
    
    3,206
    
    
    
    9,437Cash equivalents
    
    
    
    
    
    
    10,243$
    3,206
    
    
    $
    19,680Supplemental cash flow disclosure:Interest paid
    
    
    2,514
    
    
    
    23Income taxes paid
    
    
    1,811
    
    
    
    
   - 6 -




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##### 



DENISON MINES CORP.
 1.
    
    GOING CONCERN BASIS OF ACCOUNTINGAs a result of current economic conditions, prices and demand for our commodities may remain
depressed for a prolonged period of time which may cause the Company to fully utilize its
available credit facilities within the next twelve months and be in non-compliance with certain
of its financial covenants. In particular, the net total debt to EBITDA (earnings before
interest, tax, depreciation and amortization) ratio, as defined in the Companys credit
agreement, may not be met at December 31, 2009.The Company is addressing the near term liquidity requirements by taking a number of steps to
reduce the borrowing requirements including the temporary closure of negative cash flow
operations, the deferral of exploration and development expenditures and the reduction of the
Companys workforce.In addition the Company is pursuing the sale of certain of its interests in assets and
investigating alternate debt or equity financing that will allow the Company to meet its
obligations in the normal course of business. There are no assurances that additional financing
will be raised and in the event that the Company sells an asset or assets that the price
obtained will support the amounts reflected in these financial statements. The impact of any
adjustments arising from the sale of an asset or assets, which could be material, is not
reflected in these financial statements.Until the outcome of the above matters is known there is considerable uncertainty about the
appropriateness of the going concern basis of accounting.The accounting principles used in these consolidated financial statements are applicable to a
going concern which contemplates the realization of assets and settlement of liabilities in the
normal course of business as they come due. These financial statements do not reflect the
adjustments to the carrying values of assets and liabilities and the reported expenses and
balance sheet classifications that would be necessary if the Company were unable to realize its
assets and settle its liabilities as a going concern in the normal course of operations. Such
adjustments could be material.2.
    
    NATURE OF OPERATIONSDenison Mines Corp. (DMC) is incorporated under the Business Corporations Act (Ontario)
(OBCA). Denison Mines Corp. and its subsidiary companies and joint ventures (collectively,
the Company) are engaged in uranium mining and related activities, including acquisition,
exploration and development of uranium bearing properties, extraction, processing, selling and
reclamation. The environmental services division of the Company provides mine decommissioning
and decommissioned site monitoring services for third parties.The Company has a 100% interest in the White Mesa mill located in Utah, United States and a
22.5% interest in the McClean Lake mill located in the Athabasca Basin of Saskatchewan, Canada.
The Company has interests in a number of nearby mines at both locations, as well as interests in
development and exploration projects located in Canada, the United States, Mongolia and Zambia,
some of which are operated through joint ventures and joint arrangements. Uranium, the
Companys primary product, is produced in the form of uranium oxide concentrates
(U3O8) and sold to various customers around the world for further
processing. Vanadium, a co-product of some of the Companys mines is also produced and is in
the form of vanadium pentoxide, or V2O5. The Company is also in the
business of recycling uranium bearing waste materials, referred to as alternate feed
materials.Denison Mines Inc. (DMI), a subsidiary of the Company, is the manager of Uranium Participation
Corporation (UPC), a publicly-listed investment holding company formed to invest substantially
all of its assets in 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 UF6 by
UPC.References to 2008 and 2007 refer to the year ended December 31, 2008 and the year ended
December 31, 2007 respectively.
  - 7 -




---



##### 



3.
    
    SUMMARY OF SIGNIFICANT MINING INTERESTS AND ACCOUNTING POLICIESBasis of PresentationThese consolidated financial statements have been prepared by management in U.S. dollars, unless
otherwise stated, in accordance with generally accepted accounting principles in Canada
(Canadian GAAP). All adjustments considered necessary by management for fair presentation have been included in these
financial statements. Differences between Canadian GAAP and those generally accepted accounting
principles and practices in the United States (U.S. GAAP) that would have a significant impact
on these financial statements are disclosed in Note 29.Significant Mining InterestsThe following table sets forth the Companys ownership of its significant mining interests that
have projects at the development stage within them as at December 31, 2008:
 OwnershipLocation
    
    
    InterestThrough majority owned subsidiariesArizona Strip
    
    USA
    
    
    100.00
    %Henry Mountains
    
    USA
    
    
    100.00
    %Colorado Plateau
    
    USA
    
    
    100.00
    %Gurvan Saihan Joint Venture
    
    Mongolia
    
    
    70.00
    %Mutanga
    
    Zambia
    
    
    100.00
    %As interests in unincorporated joint ventures,
or jointly controlled assetsMcClean Lake Joint Venture
    
    Canada
    
    
    22.50
    %Midwest Joint Venture
    
    Canada
    
    
    25.17
    %
 Significant Accounting PoliciesThe principal accounting policies and practices under Canadian GAAP followed by the Company in
the preparation of these financial statements are summarized below:
 a) Principles of Consolidation
      b) Use of Estimates
   - 8 -




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##### 



c) Foreign Currency Translation
   d) Income Taxes
  e) Flow-Through Common Shares
  f) Cash and Equivalents
  g) Inventories
     - 9 -




---



##### 



h) Investments
   i) Property, Plant and Equipment
 Plant and equipment
  Mineral Property Acquisition, Exploration and Development Costs
   .
 Impairment of Long-Lived Assets
   j) Asset Retirement Obligations
   - 10 -




---



##### 



k) Goodwill and Other Intangibles
  l) Post-Employment Benefits
  m) Revenue Recognition
    3 8 6
  n) Stock-Based Compensation
   - 11 -




---



##### 



o) Earnings (Loss) per Share
  p) Financial Instruments  Recognition and Measurement / Presentation and Disclosure
     
    
    Cash and equivalents are classified as held-for-trading and any period change in
fair value is recorded through the results from operations.
 
    
    Trade and other receivables and Notes receivable 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, as applicable.
 
    
    Investments are classified as available-for-sale and any period change in fair value
is recorded through other comprehensive income. Where the investment experiences an
other-than temporary decline in value, the loss is recognized in the results of
operations.
 
    
    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 other income, as applicable.
 New Accounting Standards Adopted
  a)
    
    CICA Handbook Section 1400 General Standards of Financial Statement Presentation
which was amended to include a requirement that management make an assessment of an
entitys ability to continue as a going concern when preparing financial statements.
 b)
    
    CICA Handbook Section 3031 Inventories which provides guidance on the determination
of cost and its subsequent recognition as an expense, including any write-down to net
realizable value. It also provides guidance on the cost formulas that are used to assign
costs to inventories. There was no impact to the Companys financial results from adopting
this standard.
 c)
    
    CICA Handbook Section 3862 Financial Instruments  Disclosures and Section 3863
Financial Instruments  Presentation which requires disclosures in the financial
statements that will enable users to evaluate: the significance of financial instruments
for the companys financial positions and performance; the nature and extent of risks
arising from financial instruments to which the company is exposed during the period and at
the balance sheet date; and how the company manages those risks (see note 26).
  - 12 -




---



##### 



d)
    
    CICA Handbook Section 1535 Capital Disclosures which requires the disclosure of both
qualitative and quantitative information that enable users to evaluate the companys
objectives, policies and processes for managing capital (see note 26).
 Accounting Standards Issued but not yet Adopted
  a)
    
    CICA Handbook Section 3064 Goodwill and intangible assets provides guidance on the
recognition, measurement, presentation and disclosure for goodwill and intangible assets,
other than the initial recognition of goodwill or intangible assets acquired in a business
combination. This standard is effective for fiscal years beginning on or after October 1,
2008 and requires retroactive application to prior period financial statements. The Company
has evaluated the impact of this new standard for adoption on January 1, 2009 and does not
expect any significant impact on its consolidated financial statements.
 b)
    
    CICA Handbook Section 1582 Business Combinations, Section 1601 Consolidated
Financial Statements and Section 1602 Non-Controlling Interests which replace the former
CICA 1581 Business Combinations and CICA 1600 Consolidated Financial Statements and
establish a new section for accounting for a non-controlling interest in a subsidiary.
These sections provide the Canadian equivalent to FASB Statements No.141(R) Business
Combinations and No.160 Non-Controlling Interests in Consolidated Financial Statements.
CICA 1582 is effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period after January 1, 2011. CICA 1601
and CICA 1602 apply to interim and annual consolidated financial statements relating to
years beginning on or after January 1, 2011 although early adoption is permitted. CICA
1582, which replaces Handbook Section 1581, Business Combinations, establishes standards
for the measurement of a business combination and the recognition and measurement of assets
acquired and liabilities assumed. CICA 1601, which replaces Handbook Section 1600, carries
forward the existing Canadian guidance on aspects of the preparation of consolidated
financial statements subsequent to acquisition other than non-controlling interests. CICA
1602 establishes guidance for the treatment of non-controlling interests subsequent to
acquisition through a business combination.
 c)
    
    Emerging Issues Committee Abstract 173 Credit risk and the fair value of financial
assets and financial liabilities requires the Company to consider its own credit risk and
the credit risk of the counterparty when determining the fair value of financial assets and
financial liabilities, including derivative instruments. EIC 173 is effective for years
beginning after January 1, 2010.
 Comparative Numbers
  4.
    
    ACQUISITIONSAcquisition of OmegaCorp Limited (OmegaCorp)Effective August 1, 2007, the Company acquired 100% of the common shares of OmegaCorp, an
exploration and development company. The cost of this investment, which was settled in cash,
was $167,204,000.
  - 13 -




---



##### 



OmegaCorpFair ValueAugust 1,(in thousands)
    
    2007Cash and equivalents
    
    $
    8,621Trade and other receivables
    
    
    243Long-term investments
    
    
    3,022Property, plant and equipmentPlant and equipment
    
    
    199Mineral properties
    
    
    208,088Total assets
    
    
    220,173Accounts payable and accrued liabilities
    
    
    947Future income tax liability
    
    
    52,022Total liabilities
    
    
    52,969Net assets purchased
    
    $
    167,204
   5.
    
    INVENTORIESThe inventories balance consists of:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Uranium concentrates and work-in-progress
    
    $
    12,378
    
    
    $
    8,344Vanadium concentrates and work-in-progress
    
    
    4,445
    
    
    
    Inventory of ore in stockpiles
    
    
    26,841
    
    
    
    19,289Mine and mill supplies
    
    
    6,085
    
    
    
    3,288$
    49,749
    
    
    $
    30,921Inventories:Current
    
    $
    44,733
    
    
    $
    30,921Long-term  ore in stockpiles
    
    
    5,016
    
    
    
    $
    49,749
    
    
    $
    30,921
   - 14 -




---



##### 



6.
    
    INVESTMENTSThe investments balance consists of:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007InvestmentsAvailable for sale securities at fair value (1)
    
    $
    10,691
    
    
    $
    34,437$
    10,691
    
    
    $
    34,437Investments:Current
    
    
    
    
    
    
    13,930Long-term
    
    
    10,691
    
    
    
    20,507$
    10,691
    
    
    $
    34,437
 (1)
    
    For accounting purposes, effective January 1, 2007, investments are carried at fair
value on the balance sheet. The adjustments to fair value have been reflected in other
comprehensive income net of tax. Investments
       Investments in affiliates
    - 15 -




---



##### 



7.
    
    PROPERTY, PLANT AND EQUIPMENTProperty, plant and equipment consist of:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Cost, net of write-downsPlant and equipmentMill and mining related
    
    $
    169,971
    
    
    $
    135,375Environmental services and other
    
    
    2,439
    
    
    
    2,742Mineral properties
    
    
    590,758
    
    
    
    609,569763,168
    
    
    
    747,686Accumulated depreciation and amortizationPlant and equipmentMill and mining related
    
    
    16,938
    
    
    
    9,182Environmental services and other
    
    
    1,146
    
    
    
    843Mineral properties
    
    
    27,651
    
    
    
    9,83845,735
    
    
    
    19,863Property, plant and equipment, net
    
    $
    717,433
    
    
    $
    727,823Net book valuePlant and equipmentMill and mining related
    
    $
    153,033
    
    
    $
    126,193Environmental services and other
    
    
    1,293
    
    
    
    1,899Mineral properties
    
    
    563,107
    
    
    
    599,731$
    717,433
    
    
    $
    727,823
  Plant and Equipment  Mill and Mining Related
   Plant and Equipment  Environmental Services and Other
   - 16 -




---



##### 



Mineral Properties
  Canada
   a)
    
    Moore Lake  the Company has a 75% interest in the project (located in the Athabasca
Basin) subject to a 2.5% net smelter return royalty;
 b)
    
    Wheeler River  in October 2004, the Company entered into an option agreement with its
joint venture partners to earn a further 20% ownership interest in the Wheeler project by
funding CDN$7,000,000 in exploration expenditures over the next 6 years. During 2007, the
Company fulfilled its obligations under the option agreement and increased its ownership
interest in the project from 40% to 60%;
 c)
    
    Wolly  In October 2004, the Company entered into an option agreement with its joint
venture partners to earn a 22.5% ownership interest in the Wolly project by funding
CDN$5,000,000 in exploration expenditures over the next six years. As at December 31,
2008, the Company has incurred a total of CDN$3,822,000 towards this option and has earned
a 13.0% ownership interest in the project under the phase-in ownership provisions of the
agreement; and
 d)
    
    Park Creek  In the first quarter of 2006, the Company entered into an option agreement
to earn up to a 75% interest in the Park Creek project. The Company is required to incur
exploration expenditures of CDN$2,800,000 over three years to earn an initial 49% interest
and a further CDN$3,000,000 over two years to earn an additional 26% interest. As at
December 31, 2008, the Company has incurred a total of CDN$3,341,000 towards the option and
has earned a 49% ownership interest in the project under the phase-in ownership provisions
of the agreement.
 United States
    Mongolia
  Zambia
  8.
    
    RESTRICTED CASH AND EQUIVALENTSThe Company has certain restricted cash and equivalents deposited to collateralize its
reclamation and certain other obligations. The restricted cash and equivalents balance consists
of:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007U.S. mill and mine reclamation
    
    $
    19,745
    
    
    $
    15,849Elliot Lake reclamation trust fund
    
    
    1,541
    
    
    
    1,948$
    21,286
    
    
    $
    17,797
  - 17 -




---



##### 



U.S. Mill and Mine Reclamation
  Elliot Lake Reclamation Trust Fund
  9.
    
    INTANGIBLESA continuity summary of intangibles is presented below:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Intangibles, beginning of year
    
    $
    6,979
    
    
    $
    10,844Fair value allocation adjustments
    
    
    
    
    
    
    (4,279
    )Amortization
    
    
    (900
    )
    
    
    (958
    )Foreign exchange
    
    
    (1,101
    )
    
    
    1,372Intangibles, end of year
    
    $
    4,978
    
    
    $
    6,979Intangibles, by item:UPC management contract
    
    
    4,557
    
    
    
    6,495Urizon technology licenses
    
    
    421
    
    
    
    484$
    4,978
    
    
    $
    6,979
 UPC Management Contract
  Urizon Technology Licenses
    - 18 -




---



##### 



10.
    
    GOODWILLA continuity summary of goodwill is presented below:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Goodwill, beginning of year
    
    $
    122,330
    
    
    $
    102,841Fair value allocation adjustments
    
    
    
    
    
    
    1,314Impairment charge
    
    
    (36,512
    )
    
    
    Foreign exchange
    
    
    (22,578
    )
    
    
    18,175Goodwill, end of year
    
    $
    63,240
    
    
    $
    122,330Goodwill, by business unit:Canada mining segment
    
    $
    63,240
    
    
    $
    122,330
    11.
    
    POST-EMPLOYMENT BENEFITSThe 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 1, 2008. 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
    
    
    7.50
    %Initial medical cost growth rate per annum
    
    
    11.00
    %Medical cost growth rate per annum decline to
    
    
    5.00
    %Year in which medical cost growth rate reaches its final level
    
    
    2014Dental cost growth rate per annum
    
    
    4.00
    %
  - 19 -




---



##### 



December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Post-employment liability, beginning of year
    
    $
    4,434
    
    
    $
    3,971Benefits paid
    
    
    (338
    )
    
    
    (432
    )Interest cost
    
    
    194
    
    
    
    215Amortization of experience gain
    
    
    (127
    )
    
    
    Foreign exchange
    
    
    (806
    )
    
    
    680Post-employment liability, end of year
    
    $
    3,357
    
    
    $
    4,434Post-employment liability:Accrued benefit obligation
    
    $
    3,157
    
    
    $
    4,434Unamortized experience gain
    
    
    200
    
    
    
    Post-employment liability, end of year
    
    $
    3,357
    
    
    $
    4,434Post-employment benefits liability by duration:Current
    
    $
    329
    
    
    $
    404Non-current
    
    
    3,028
    
    
    
    4,030$
    3,357
    
    
    $
    4,434
  12.
    
    RECLAMATION AND REMEDIATION OBLIGATIONSA continuity summary of reclamation and remediation obligations is presented below:
 December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Reclamation obligations, beginning of year
    
    $
    20,389
    
    
    $
    18,447Accretion
    
    
    1,996
    
    
    
    1,364Expenditures incurred
    
    
    (849
    )
    
    
    (436
    )Liability adjustments
    
    
    (339
    )
    
    
    (449
    )Foreign exchange
    
    
    (1,851
    )
    
    
    1,463Reclamation obligations, end of year
    
    $
    19,346
    
    
    $
    20,389Site restoration liability by location:U.S. Mill and Mines
    
    $
    11,436
    
    
    $
    10,467Elliot Lake
    
    
    6,734
    
    
    
    8,319McLean Lake and Midwest Joint Ventures
    
    
    1,176
    
    
    
    1,603$
    19,346
    
    
    $
    20,389Site restoration liability :Current
    
    $
    875
    
    
    $
    565Non-current
    
    
    18,471
    
    
    
    19,824$
    19,346
    
    
    $
    20,389
  - 20 -




---



##### 



Site Restoration: U.S. Mill and Mines
  Site Restoration: Elliot Lake
   Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture
   13.
    
    DEBT OBLIGATIONSDebt obligations consist of:
 At December 31
    
    
    At December 31(in thousands)
    
    2008
    
    
    2007Revolving line of credit
    
    $
    99,998
    
    
    $
    Deferred debt issue costs
    
    
    (769
    )
    
    
    Notes payable and other financing
    
    
    525
    
    
    
    42$
    99,754
    
    
    $
    42Other long-term liabilities:Current
    
    
    464
    
    
    
    42Non-current
    
    
    99,290
    
    
    
    $
    99,754
    
    
    $
    42
 Revolving Line of Credit
    - 21 -




---



##### 



Scheduled Debt Obligation Maturities
  (in thousands)2009
    
    $
    4642010
    
    
    162011
    
    
    100,0142012
    
    
    162013
    
    
    132014 and thereafter
    
    
    
 14.
    
    OTHER LONG-TERM LIABILITIES
  At December 31
    
    
    At December 31(in thousands)
    
    2008
    
    
    2007Unamortized fair value of sales contracts
    
    $
    2,429
    
    
    $
    12,812Unamortized fair value of toll milling contracts
    
    
    821
    
    
    
    1,008Other
    
    
    120
    
    
    
    100$
    3,370
    
    
    $
    13,920Other long-term liabilities:Current
    
    
    2,179
    
    
    
    6,577Non-current
    
    
    1,191
    
    
    
    7,343$
    3,370
    
    
    $
    13,920
   - 22 -




---



##### 



15.
    
    INCOME TAXES
  (in thousands)
    
    2008
    
    
    2007Combined basic tax rate
    
    
    33.5
    %
    
    
    36.0
    %Income (loss) before taxes
    
    $
    (72,976
    )
    
    $
    34,620Income tax expense (recovery) at basic tax rate
    
    
    (24,447
    )
    
    
    12,465Non-deductible amounts
    
    
    19,597
    
    
    
    796Non-taxable amounts
    
    
    (9,138
    )
    
    
    (8,712
    )Flow through shares renounced
    
    
    (5,267
    )
    
    
    Difference in foreign tax rates
    
    
    504
    
    
    
    748Change in valuation allowance
    
    
    14,083
    
    
    
    (4,227
    )Impact of legislative changes
    
    
    10,738
    
    
    
    (10,797
    )Other
    
    
    1,602
    
    
    
    (2,897
    )Tax expense (recovery) per consolidated
financial statements
    
    $
    7,672
    
    
    $
    (12,624
    )
  December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Future income tax assets:Inventory
    
    $
    3,515
    
    
    $
    Property, plant and equipment, net
    
    
    9,202
    
    
    
    9,755Long-term investments
    
    
    1,220
    
    
    
    Intangibles
    
    
    
    
    
    
    106Deferred revenue
    
    
    
    
    
    
    944Post-employment benefits
    
    
    960
    
    
    
    1,208Reclamation and remediation obligations
    
    
    6,160
    
    
    
    2,271Other long-term liabilities
    
    
    890
    
    
    
    3,732Tax loss carryforwards
    
    
    12,566
    
    
    
    1,735Other
    
    
    4,942
    
    
    
    3,34739,455
    
    
    
    23,098Future income tax liability:Inventory
    
    
    (2,802
    )
    
    
    (3,492
    )Long-term investments
    
    
    (580
    )
    
    
    (4,517
    )Property, plant and equipment, net
    
    
    (136,754
    )
    
    
    (146,764
    )Intangibles
    
    
    (1,247
    )
    
    
    (1,770
    )Other
    
    
    (756
    )
    
    
    Future tax liabilities  net
    
    
    (102,684
    )
    
    
    (133,445
    )Valuation allowance
    
    
    (21,370
    )
    
    
    (8,080
    )Net future income tax liabilities
    
    $
    (124,054
    )
    
    $
    (141,525
    )
   - 23 -




---



##### 



AmountCountry
    
    (in thousands)
    
    
    ExpiryAustralia
    
    $
    1,278
    
    
    UnlimitedCanada
    
    
    3,511
    
    
    
    2028Mongolia
    
    
    358
    
    
    
    2009-2010United States
    
    
    20,346
    
    
    
    2018-2028Zambia
    
    
    3,653
    
    
    
    2011-2013
  16.
    
    SHARE CAPITAL
  Number ofCommon(in thousands except share amounts)
    
    Shares
    
    
    AmountBalance at December 31, 2006
    
    
    178,142,682
    
    
    $
    548,069Issued for cash:New issue gross proceeds
    
    
    10,114,995
    
    
    
    105,419New issue gross issue costs
    
    
    
    
    
    
    (3,268
    )Exercise of stock options
    
    
    1,367,962
    
    
    
    5,102Exercise of share purchase warrants
    
    
    2,592
    
    
    
    12Issued for mineral property acquisition
    
    
    103,000
    
    
    
    947Fair value of stock options exercised
    
    
    
    
    
    
    6,663Fair value of share purchase warrants exercised
    
    
    
    
    
    
    5Other
    
    
    404
    
    
    
    11,588,953
    
    
    
    114,880Balance at December 31, 2007
    
    
    189,731,635
    
    
    $
    662,949Issues for cashNew issue gross proceeds
    
    
    7,275,000
    
    
    
    6,469New issue gross issue costs
    
    
    
    
    
    
    (396
    )Exercise of stock options
    
    
    288,780
    
    
    
    1,527Renunciation of flow-through share liability
    
    
    
    
    
    
    (5,267
    )Fair value of stock options exercised
    
    
    
    
    
    
    9967,563,780
    
    
    
    3,329Balance at December 31, 2008
    
    
    197,295,415
    
    
    $
    666,278
 New Issues
     - 24 -




---



##### 



Acquisition Related Issues
  Flow-Through Share Issues
   17.
    
    SHARE PURCHASE WARRANTS
  Weighted Average
    
    
    Number of
    
    
    FairExercise Price
    
    
    Common Shares
    
    
    Value(in thousands except share amounts)
    
    Per Share (CDN$)
    
    
    Issuable
    
    
    AmountBalance outstanding at December 31, 2006
    
    
    8.70
    
    
    
    9,567,507
    
    
    $
    11,733Warrants exercised in 2007
    
    
    5.21
    
    
    
    (2,592
    )
    
    
    (5
    )Balance outstanding at December 31,
2007 and December 31, 2008
    
    
    8.70
    
    
    
    9,564,915
    
    
    $
    11,728Balance exercisable at December 31, 2007 and December 31, 2008
    
    
    8.70
    
    
    
    9,564,915
    
    
    $
    11,728Balance of common shares issuable by warrant
seriesNovember 2004 series (1)
    
    
    
    
    
    
    3,156,915
    
    
    
    5,898March 2006 series (2)
    
    
    
    
    
    
    6,408,000
    
    
    
    5,830Balance outstanding at December 31, 2007 and December 31, 2008
    
    
    
    
    
    
    9,564,915
    
    
    $
    11,728
 (1)
    
    The November 2004 series has an effective exercise price of CDN$5.21 per issuable share
(CDN$15.00 per warrant adjusted for the 2.88 exchange ratio associated with the Denison and
IUC merger) and expires on November 24, 2009.(2)
    
    The March 2006 series has 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 expires on March 1, 2011. 18.
    
    CONTRIBUTED SURPLUS
  December 31,
    
    
    December 31,(in thousands)
    
    2008
    
    
    2007Balance, beginning of year
    
    $
    25,471
    
    
    $
    30,752Stock-based compensation expense (note 19)
    
    
    6,062
    
    
    
    1,382Fair value of stock options exercised
    
    
    (996
    )
    
    
    (6,663
    )Balance, end of year
    
    $
    30,537
    
    
    $
    25,471
  - 25 -




---



##### 



19.
    
    STOCK OPTIONS
    2008
    
    
    
    
    
    
    2007Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseNumber of
    
    
    Price per
    
    
    Number of
    
    
    Price perCommon
    
    
    Share
    
    
    Common
    
    
    ShareShares
    
    
    (CDN $)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding, beginning of year
    
    
    5,961,354
    
    
    $
    7.27
    
    
    
    6,648,316
    
    
    $
    6.23Granted
    
    
    3,093,000
    
    
    
    7.57
    
    
    
    717,000
    
    
    
    11.19Exercised
    
    
    (288,780
    )
    
    
    5.30
    
    
    
    (1,367,962
    )
    
    
    4.21Forfeitures  voluntary
    
    
    (2,415,490
    )
    
    
    8.49
    
    
    
    
    
    
    
    Expired
    
    
    (813,700
    )
    
    
    6.54
    
    
    
    (36,000
    )
    
    
    10.74Stock options outstanding, end of the year
    
    
    5,536,384
    
    
    $
    7.11
    
    
    
    5,961,354
    
    
    $
    7.27Stock options exercisable, end of year
    
    
    4,864,301
    
    
    $
    7.33
    
    
    
    5,520,872
    
    
    $
    6.96
  Weighted
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    ExerciseContractual
    
    
    Number of
    
    
    Price perRange of Exercise Prices per Share
    
    Life
    
    
    Common
    
    
    Share(CDN$)
    
    (Years)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding$1.37 to $4.87
    
    
    5.42
    
    
    
    1,217,575
    
    
    $
    2.01$5.02 to $8.50
    
    
    5.99
    
    
    
    1,866,799
    
    
    
    5.49$10.08 to $15.30
    
    
    1.05
    
    
    
    2,452,010
    
    
    
    10.87Stock options outstanding, end of year
    
    
    3.68
    
    
    
    5,536,384
    
    
    $
    7.11
  Weighted
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    ExerciseContractual
    
    
    Number of
    
    
    Price perRange of Exercise Prices per Share
    
    Life
    
    
    Common
    
    
    Share(CDN$)
    
    (Years)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding$1.88 to $4.87
    
    
    6.48
    
    
    
    1,044,555
    
    
    $
    2.14$5.02 to $7.53
    
    
    7.28
    
    
    
    2,225,799
    
    
    
    5.29$10.08 to $15.30
    
    
    2.10
    
    
    
    2,691,000
    
    
    
    10.89Stock options outstanding, end of year
    
    
    4.80
    
    
    
    5,961,354
    
    
    $
    7.27
  - 26 -




---



##### 



2008
    
    2007Risk-free interest rate
    
    2.58%  3.29%
    
    3.95% to 4.46%Expected stock price volatility
    
    52.2%  61.7%
    
    46.4%  63.0%Expected life
    
    2.1  3.5 years
    
    2.1  3.5 yearsExpected forfeitures
    
    
    
    Expected dividend yield
    
    
    
    Fair value per share under options granted
    
    CDN$0.63  CDN$4.49
    
    CDN$3.18  CDN$5.32
  (in thousands)
    
    2008
    
    
    2007Operating expenses
    
    $
    599
    
    
    $
    423Mineral property exploration
    
    
    591
    
    
    
    236General and administrative
    
    
    4,872
    
    
    
    723$
    6,062
    
    
    $
    1,382
  20.
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  (in thousands)
    
    2008
    
    
    2007Cumulative foreign currency translation gain (loss)Balance, beginning of year
    
    $
    92,856
    
    
    $
    (8,498
    )Change in foreign currency translation
    
    
    (97,781
    )
    
    
    101,354Balance, end of year
    
    
    (4,925
    )
    
    
    92,856Unrealized gains on investmentsBalance, beginning of year
    
    
    18,100
    
    
    
    Unrealized gains as at January 1, 2007, net of tax (1)
    
    
    
    
    
    
    24,842Net increase (decrease) in unrealized gains, net of tax
(2)
    
    
    (17,884
    )
    
    
    (6,742
    )Balance, end of year
    
    
    216
    
    
    
    18,100Accumulated other comprehensive income (loss), end of year
    
    $
    (4,709
    )
    
    $
    110,956
 (1)
    
    Reflects the adoption of CICA Section 3855 on January 1, 2007.(2)
    
    Unrealized gains (losses) on investments deemed available-for-sale are included in
other comprehensive income (loss) until realized. When the investment is disposed of or
incurs a decline in value that is other than temporary, the gain (loss) is realized and
reclassified to the income statement. During 2008, approximately $196,000 of gains from
asset disposals and $12,952,000 of other than temporary losses were realized and
reclassified to the income statement within Other income, net.  - 27 -




---



##### 



21.
    
    OTHER INCOME, NET
  (in thousands)
    
    2008
    
    
    2007Interest income, net of fees
    
    $
    1,114
    
    
    $
    5,694Interest expense
    
    
    (2,652
    )
    
    
    (29
    )Gains (losses) on:Foreign exchange
    
    
    15,544
    
    
    
    (9,671
    )Land, plant and equipment
    
    
    125
    
    
    
    (18
    )Investment disposals
    
    
    196
    
    
    
    45,115Investment other than temporary losses
    
    
    (12,952
    )
    
    
    Restricted cash and equivalents
    
    
    1,176
    
    
    
    536Other
    
    
    (83
    )
    
    
    Other income (expense), net
    
    $
    2,468
    
    
    $
    41,627
 22.
    
    SEGMENTED INFORMATION
 Business Segments
   - 28 -




---



##### 



Canada
    
    
    U.S.A
    
    
    Africa
    
    
    Asia
    
    
    Corporate(in thousands)
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    and Other
    
    
    TotalStatement of Operations:Revenues
    
    
    52,698
    
    
    
    61,995
    
    
    
    
    
    
    
    
    
    
    
    8,491
    
    
    
    123,184ExpensesOperating expenses
    
    
    44,432
    
    
    
    67,612
    
    
    
    
    
    
    
    
    
    
    
    6,025
    
    
    
    118,069Sales royalties and capital taxes
    
    
    3,016
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101
    
    
    
    3,117Mineral property exploration
    
    
    11,953
    
    
    
    298
    
    
    
    3,079
    
    
    
    4,784
    
    
    
    
    
    
    
    20,114General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,754
    
    
    
    14,754Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,062
    
    
    
    6,062Goodwill impairment
    
    
    36,512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,51295,913
    
    
    
    67,910
    
    
    
    3,079
    
    
    
    4,784
    
    
    
    26,942
    
    
    
    198,628Income (loss) from operations
    
    
    (43,215
    )
    
    
    (5,915
    )
    
    
    (3,079
    )
    
    
    (4,784
    )
    
    
    (18,451
    )
    
    
    (75,444
    )Revenues  supplemental:Uranium concentrates
    
    
    52,698
    
    
    
    61,890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    114,588Environmental services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,562
    
    
    
    5,562Management fees and commissions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,929
    
    
    
    2,929Alternate feed processing and other
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10552,698
    
    
    
    61,995
    
    
    
    
    
    
    
    
    
    
    
    8,491
    
    
    
    123,184Long-lived assets:Property, plant and equipmentPlant and equipment
    
    
    78,223
    
    
    
    73,859
    
    
    
    669
    
    
    
    282
    
    
    
    1,293
    
    
    
    154,326Mineral properties
    
    
    289,637
    
    
    
    43,324
    
    
    
    223,456
    
    
    
    6,690
    
    
    
    
    
    
    
    563,107Intangibles
    
    
    
    
    
    
    422
    
    
    
    
    
    
    
    
    
    
    
    4,556
    
    
    
    4,978Goodwill
    
    
    63,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,240431,100
    
    
    
    117,605
    
    
    
    224,125
    
    
    
    6,972
    
    
    
    5,849
    
    
    
    785,651
  - 29 -




---



##### 



Canada
    
    
    U.S.A
    
    
    Africa
    
    
    Asia
    
    
    Corporate(in thousands)
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    and Other
    
    
    TotalStatement of Operations:Revenues
    
    
    32,915
    
    
    
    34,736
    
    
    
    
    
    
    
    
    
    
    
    9,113
    
    
    
    76,764ExpensesOperating expenses
    
    
    27,012
    
    
    
    14,598
    
    
    
    
    
    
    
    
    
    
    
    5,428
    
    
    
    47,038Sales royalties and capital taxes
    
    
    2,215
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    2,301Mineral property exploration
    
    
    16,402
    
    
    
    126
    
    
    
    
    
    
    
    4,067
    
    
    
    132
    
    
    
    20,727General and administrative
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,323
    
    
    
    12,323Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,382
    
    
    
    1,38245,629
    
    
    
    14,724
    
    
    
    
    
    
    
    4,067
    
    
    
    19,351
    
    
    
    83,771Income (loss) from operations
    
    
    (12,714
    )
    
    
    20,012
    
    
    
    
    
    
    
    (4,067
    )
    
    
    (10,238
    )
    
    
    (7,007
    )Revenues  supplemental:Uranium concentrates
    
    
    32,915
    
    
    
    32,210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,125Environmental services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,723
    
    
    
    4,723Management fees and commissions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,390
    
    
    
    4,390Alternate feed processing and other
    
    
    
    
    
    
    2,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,52632,915
    
    
    
    34,736
    
    
    
    
    
    
    
    
    
    
    
    9,113
    
    
    
    76,764Long-lived assets:Property, plant and equipmentPlant and equipment
    
    
    86,810
    
    
    
    38,981
    
    
    
    314
    
    
    
    88
    
    
    
    1,899
    
    
    
    128,092Mineral properties
    
    
    369,066
    
    
    
    18,601
    
    
    
    209,694
    
    
    
    2,370
    
    
    
    
    
    
    
    599,731Intangibles
    
    
    
    
    
    
    484
    
    
    
    
    
    
    
    
    
    
    
    6,495
    
    
    
    6,979Goodwill
    
    
    122,330
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122,330578,206
    
    
    
    58,066
    
    
    
    210,008
    
    
    
    2,458
    
    
    
    8,394
    
    
    
    857,132
 Revenue Concentration
  23.
    
    RELATED PARTY TRANSACTIONS
 Uranium Participation Corporation
 3 8 6 3 8 6
   - 30 -




---



##### 



3 8 3 8
  (in thousands)
    
    2008
    
    
    2007RevenueUranium sales
    
    $
    3,225
    
    
    $
    9,750Management fees (including expenses)
    
    
    1,695
    
    
    
    2,301Commission fees on purchase and sale of uranium
    
    
    1,234
    
    
    
    2,089Other income (expense):Loan interest under credit facility
    
    
    
    
    
    
    202Standby fee under credit facility
    
    
    
    
    
    
    9$
    6,154
    
    
    $
    14,351
  Other
  a)
    
    In 2007, the Company sold 16,562,500 shares of Fortress to a company associated with
the Chairman of the Company for gross proceeds of approximately CDN$20,703,000;
 b)
    
    Management and administrative service fees of $162,000 (2007: $251,000) with a company
owned by the Chairman of the Company which provides corporate development, office premises,
secretarial and other services. At December 31, 2008, an amount of nil (2007: $9,000) was
due to this company; and
 c)
    
    In 2007, the Company provided executive and administrative services to Fortress and
charged an aggregate of $69,000 for such services.
 24.
    
    JOINT VENTURE INTERESTS
   - 31 -




---



##### 



(in thousands)
    
    2008
    
    
    2007Operating expenses
    
    $
    43,779
    
    
    $
    26,179Mineral property exploration
    
    
    14,168
    
    
    
    14,009General and administrative
    
    
    214
    
    
    
    63Net other income
    
    
    (40
    )
    
    
    (46
    )Loss for the year before taxes
    
    
    58,121
    
    
    
    40,205Current assets
    
    
    15,718
    
    
    
    21,044Property, plant and equipmentPlant and equipment
    
    
    77,669
    
    
    
    85,997Mineral properties
    
    
    296,307
    
    
    
    371,437Intangibles
    
    
    421
    
    
    
    484Current liabilities
    
    
    4,176
    
    
    
    4,177Long-term liabilities
    
    
    2,096
    
    
    
    2,712Net investment in joint ventures
    
    $
    383,843
    
    
    $
    472,073
 25.
    
    SUPPLEMENTAL CASH FLOW INFORMATION
  (in thousands)
    
    2008
    
    
    2007Decrease (increase) in non-cash working capital items:Trade and other receivables
    
    $
    23,812
    
    
    $
    (28,443
    )Inventories
    
    
    (51,099
    )
    
    
    (9,468
    )Prepaid expenses and other current assets
    
    
    136
    
    
    
    (687
    )Accounts payable and accrued liabilities
    
    
    3,136
    
    
    
    14,636Reclamation and remediation obligations
    
    
    (849
    )
    
    
    (436
    )Deferred revenue
    
    
    554
    
    
    
    (1,480
    )Post-employment benefits
    
    
    (338
    )
    
    
    (432
    )Net change in non-cash working capital items
    
    $
    (24,648
    )
    
    
    (26,310
    )
 26.
    
    CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENTS
 Capital Management
   (in thousands)
    
    2008
    
    
    2007Debt obligations  current and long-term
    
    $
    99,754
    
    
    $
    42Less: Cash and equivalents
    
    
    (3,206
    )
    
    
    (19,680
    )Adjusted net debt (cash)
    
    
    96,548
    
    
    
    (19,638
    )Shareholders Equity
    
    
    608,352
    
    
    
    796,270Adjusted net debt to Shareholders Equity ratio
    
    
    15.9
    %
    
    
    
   - 32 -




---



##### 



Fair Values of Financial Instruments
  (a) Credit Risk
  (b) Liquidity Risk
   Within 1
    
    
    1 to 5(in thousands)
    
    Year
    
    
    YearsAccounts payable and accrued liabilities
    
    $
    23,787
    
    
    $
    Debt obligations (Note 13)
    
    
    464
    
    
    
    100,059$
    24,251
    
    
    $
    100,059
 (c) Currency Risk
   Change inChange in
    
    
    Comprehensive(in thousands)
    
    Net Income (1)
    
    
    Net Income (1)Canadian dollar10% increase in value
    
    $
    (924
    )
    
    $
    41,56110% decrease in value
    
    $
    924
    
    
    $
    (41,561
    )Zambian kwacha10% increase in value
    
    $
    (5,429
    )
    
    $
    (5,429
    )10% decrease in value
    
    $
    5,429
    
    
    $
    5,429
 (1)
    
    In the above table, positive (negative) values represent increases (decreases) in net
income and comprehensive net income respectively.  - 33 -




---



##### 



(d) Interest Rate Risk
   (e) Price Risk
   Change inChange in
    
    
    Comprehensive(in thousands)
    
    Net Income (1)
    
    
    Net Income (1)Commodity price risk10% increase in uranium prices (2)
    
    $
    5,906
    
    
    $
    5,90610% decrease in uranium prices (2)
    
    $
    (5,906
    )
    
    $
    (5,906
    )Equity price risk10% increase in equity prices
    
    $
    
    
    
    $
    1,06910% decrease in equity prices
    
    $
    
    
    
    $
    (1,069
    )
 (1)
    
    In the above table, positive (negative) values represent increases (decreases) in net
income and comprehensive net income respectively.(2)
    
    The Company is exposed to fluctuations in both the spot price and long-term price of
uranium as a result of the various pricing formulas in the uranium contracts. The above
sensitivity analysis is prepared using the 12 month average actual realized price and
adjusting the uranium pricing formulas for a 10% increase or decrease in spot and long-term
prices as applicable. (f) Fair Value Estimation
     27.
    
    COMMITMENTS AND CONTINGENCIES
 General Legal Matters
  Third Party Indemnities
   - 34 -




---



##### 



Performance Bonds and Letters of Credit
  Others
  (in thousands)2009
    
    $
    9532010
    
    
    8272011
    
    
    4442012
    
    
    2942013
    
    
    1062014 and thereafter
    
    
    196
 28.
    
    SUBSEQUENT EVENTS
  29.
    
    MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
  a) Cash and Equivalents
  b) Plant and Equipment
  c) Mineral Properties and Inventory Valuation
    - 35 -




---



##### 



d) Joint Ventures
  e) Goodwill
  f) Liabilities
  g) Dilution Gains
   December 31, 2008Canadian
    
    
    
    
    
    
    
    
    
    
    U.S.GAAP
    
    
    
    
    
    
    Adjustments
    
    
    GAAPCash and cash equivalents
    
    $
    3,206
    
    
    
    (a
    )
    
    $
    (6,469
    )
    
    $
    (3,263
    )Inventories
    
    
    44,733
    
    
    
    (c
    )
    
    
    (909
    )
    
    
    43,824Property, plant and equipment
    
    
    717,433
    
    
    
    (c
    )
    
    
    (62,270
    )
    
    
    655,163Restricted cash and equivalents
    
    
    21,286
    
    
    
    (a
    )
    
    
    6,469
    
    
    
    27,755Accounts payable and accrued liabilities
    
    
    23,787
    
    
    
    (f
    )
    
    
    1,682
    
    
    
    25,469Future income tax liability
    
    
    124,054
    
    
    
    (c
    )
    
    
    (1,373
    )
    
    
    122,681Share capital
    
    
    666,278
    
    
    
    (e
    )
    
    
    (616
    )(f
    )
    
    
    (1,682
    )
    
    
    663,980Additional paid-in capital
    
    
    
    
    
    
    (g
    )
    
    
    9,814
    
    
    
    9,814Deficit
    
    
    (95,482
    )
    
    
    (c
    )
    
    
    (63,746
    )(c
    )
    
    
    1,373(e
    )
    
    
    616(g
    )
    
    
    (9,814
    )
    
    
    (167,053
    )Accumulated other comprehensive loss
    
    
    (4,709
    )
    
    
    (c
    )
    
    
    567
    
    
    
    (4,142
    )
  - 36 -




---



##### 



December 31, 2007Canadian
    
    
    
    
    
    U.S.GAAP
    
    
    
    
    
    
    Adjustments
    
    
    GAAPCash and cash equivalents
    
    $
    19,680
    
    
    
    (a
    )
    
    $
    (7,862
    )
    
    $
    11,818Property, plant and equipment
    
    
    727,823
    
    
    
    (c
    )
    
    
    (16,444
    )
    
    
    711,379Restricted cash and equivalents
    
    
    17,797
    
    
    
    (a
    )
    
    
    7,862
    
    
    
    25,659Accounts payable and accrued liabilities
    
    
    22,642
    
    
    
    (f
    )
    
    
    3,114
    
    
    
    25,756Future income tax liability
    
    
    141,525
    
    
    
    (c
    )
    
    
    (4,621
    )
    
    
    136,904Share capital
    
    
    662,949
    
    
    
    (e
    )
    
    
    (616
    )(f
    )
    
    
    (3,114
    )
    
    
    659,219Additional paid-in capital
    
    
    
    
    
    
    (g
    )
    
    
    9,814
    
    
    
    9,814Deficit
    
    
    (14,834
    )
    
    
    (c
    )
    
    
    (16,098
    )(c
    )
    
    
    4,621(e
    )
    
    
    616(g
    )
    
    
    (9,814
    )
    
    
    (35,509
    )Accumulated other comprehensive income
    
    
    110,956
    
    
    
    (c
    )
    
    
    (346
    )
    
    
    110,610
  2008
    
    
    2007Net income (loss) for the year, Canadian GAAP
    
    
    
    
    
    $
    (80,648
    )
    
    $
    47,244Depreciation of assets held for resale
    
    
    (b
    )
    
    
    
    
    
    
    (301
    )Adjust capitalized mineral property amounts, net of tax
    
    
    (c
    )
    
    
    (49,987
    )
    
    
    (11,477
    )Adjust inventory valuation, net of tax
    
    
    (c
    )
    
    
    (909
    )
    
    
    Net income (loss) for the year, U.S. GAAP
    
    
    
    
    
    $
    (131,544
    )
    
    $
    35,466Deficit, beginning of year, U.S. GAAP
    
    
    
    
    
    $
    (35,509
    )
    
    $
    (70,975
    )Deficit, end of year, U.S. GAAP
    
    
    
    
    
    $
    (167,053
    )
    
    $
    (35,509
    )Comprehensive income, U.S. GAAPNet income (loss) for the year, U.S. GAAP
    
    
    
    
    
    $
    (131,544
    )
    
    $
    35,466Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    
    
    (17,884
    )
    
    
    (6,742
    )Cumulative foreign currency translation gain (loss)
    
    
    
    
    
    
    (96,868
    )
    
    
    101,008Comprehensive income (loss), U.S. GAAP
    
    
    
    
    
    
    (246,296
    )
    
    
    129,732Basic net income (loss) per share, U.S. GAAP
    
    
    
    
    
    $
    (0.69
    )
    
    $
    0.19Diluted net Income (loss) per share, U.S. GAAP
    
    
    
    
    
    $
    (0.69
    )
    
    $
    0.18
  - 37 -




---



##### 



2008
    
    
    2007Net cash provided by (used in) operating activities:Under Canadian GAAP
    
    
    
    
    
    $
    (8,764
    )
    
    $
    (23,084
    )Adjustment for capitalized mineral property amounts
    
    
    (c
    )
    
    
    (62,837
    )
    
    
    (16,098
    )Under U.S. GAAP
    
    
    
    
    
    $
    (71,601
    )
    
    $
    (39,182
    )Net cash provided by (used in) investing activities:Under Canadian GAAP
    
    
    
    
    
    $
    (115,706
    )
    
    $
    (158,469
    )Adjustment for capitalized mineral property amounts
    
    
    (c
    )
    
    
    62,837
    
    
    
    16,098Under U.S. GAAP
    
    
    
    
    
    $
    (52,869
    )
    
    $
    (142,371
    )Net cash provided by (used in) financing
activities:Under Canadian GAAP
    
    
    
    
    
    $
    107,147
    
    
    $
    107,215Restricted cash from flow-through financings
    
    
    (a
    )
    
    
    (6,469
    )
    
    
    (7,862
    )Under U.S. GAAP
    
    
    
    
    
    $
    100,678
    
    
    $
    99,353
  a)
    
    Effective January 1, 2007, the Company adopted the Financial Accounting Standards Board
(FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109 (FIN 48). FIN 48 clarifies the accounting for
income taxes by prescribing the minimum recognition threshold a tax position is required to
meet before being recognized in the financial statements. FIN 48 also provides guidance on
derecognition, measurement, classification, interest and penalties, accounting in interim
periods, disclosure and transition. In addition, FIN 48 scopes out income taxes from FASB
Statement No. 5, Accounting for Contingencies. FIN 48 applies to all tax positions related
to income taxes subject to FASB Statement No. 109, Accounting for Income Taxes. This
includes tax positions considered to be routine as well as those with a high degree of
uncertainty.The provisions of FIN 48 prescribe a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. The interpretation requires that the Company recognize the impact of
a tax position in the financial statements if that position is more likely than not of being
sustained on audit, based on the technical merits of the position. FIN 48 also provides
guidance on derecognition, classification, interest and penalties, accounting in interim
periods and disclosure. In accordance with the provisions of FIN 48, any cumulative effect
resulting from the change in accounting principle is to be recorded as an adjustment to the
opening balance of retained earnings (deficit). The adoption of FIN 48 did not materially
impact the Companys consolidated financial position or results of operations.b)
    
    Effective January 1, 2007, the Company adopted FSP No. AUG AIR-1, Accounting for
Planned Major Maintenance Activities. The FSP permits companies to account for planned
major maintenance activities using; the direct expensing method, the built-in overhaul
method or the deferral method. The FSP was adopted on a retrospective basis. The Company
has chosen the direct expensing method. The adoption of this standard did not have a
material impact on the Companys consolidated financial position or results of operations.c)
    
    Effective January 1, 2008, the Company adopted FASB Statement No. 157, Fair Value
Measurements (SFAS 157). The Company also applied FSP FAS 157-2, which allows for the
delay of implementation of FAS No. 157 for certain nonfinancial assets and nonfinancial
liabilities until its fiscal year beginning January 1, 2009. SFAS 157 provides enhanced
guidance for using fair value to measure assets and liabilities and provides expanded
disclosure about the extent to which companies measure their assets and liabilities at fair
value, the information used to measure fair value, and the effect of fair value
measurements on earnings. SFAS 157 applies whenever other standards require (or permit)
assets or liabilities to be measured at fair value; however, it does not expand the use of
fair value in any new circumstances. The adoption of this standard did not have a material
impact on the Companys consolidated financial position or results of operations.  - 38 -




---



##### 



d)
    
    Effective January 1, 2008, the Company adopted, the FASB Statement No. 159 (FAS 159),
The Fair Value Option for Financial Assets and Financial Liabilities. This statement
expands the standards under FAS 157, Fair Value Measurement, to provide entities the
one-time election (Fair Value Option) to measure financial instruments and certain other
items at fair value. The adoption of this standard did not have a material impact on the
Companys consolidated financial position or results of operations.  a)
    
    In December 2007, FASB Statement No. 141(R), Business Combinations and No. 160,
Non-controlling Interests in Consolidated Financial Statements. SFAS 141(R) and 160
provide standards with respect to improving, simplifying and converging the prevailing FASB
accounting and reporting standards for business combinations and non-controlling interests
in consolidated financial statements with International Accounting Standards Board (IASB)
standards for business combinations with an acquisition date in the fiscal year beginning
after December 15, 2008.FASB 141 (R) requires an acquiring entity in a business combination to recognize all (and
only) the assets acquired and liabilities assumed in the transaction; establishes the
acquisition-date fair value as the measurement objective for all assets acquired and
liabilities assumed; and requires the acquirer to disclose to investors and other users all
of the information they need to evaluate and understand the nature and financial effect of
the business combination. FASB 160 requires all entities to report non-controlling
(minority) interests in subsidiaries in the same way  as equity in the consolidated
financial statements.b)
    
    In March 2008, FASB Statement No.161, Disclosures about Derivative Instruments and
Hedging Activities an amendment of FASB Statement 133. SFAS 161 is effective for fiscal
years and interim periods beginning after November 15, 2008. The adoption is not expected
to have a material impact on the Companys consolidated results of operations and financial
position.c)
    
    In May 2008, FASB Statement No.162, The Hierarchy of Generally Accepted Accounting
Principles (SFAS 162). Under SFAS 162, the US GAAP hierarchy will now reside in the
accounting literature established by the FASB. SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation for the financial statements in conformity with US GAAP SFAS. The adoption of
SFAS No 162 is not expected to have a material impact on the Companys consolidated results
of operations and financial position.  - 39 -