Exhibit 99.3




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##### 



Responsibility for Financial Statements
     Ron F. Hochstein
    
    James R. AndersonRon F. Hochstein
    
    James R. AndersonPresident and Chief Executive Officer
    
    Executive Vice-President and 

Chief Financial Officer
  Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework
  Changes to Internal Control over Financial Reporting
   - 1 -




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##### 



Independent Auditors Report
 To the Shareholders of Denison Mines Corp.
  Report on the consolidated financial statements
  Managements responsibility for the consolidated financial statements
  Auditors responsibility
    Opinion
  Report on internal control over financial reporting
  Managements responsibility for internal control over financial reporting
   - 2 -




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##### 



Auditors responsibility
    Definition of internal control over financial reporting
  Inherent limitations
  Opinion
  PricewaterhouseCoopers LLP
 Chartered Accountants, Licensed Public Accountants
  - 3 -




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##### 



DENISON MINES CORP.
 December 31,
    
    
    December 31,2010
    
    
    2009ASSETSCurrentCash and cash equivalents
    
    $
    97,554
    
    
    $
    19,804Trade and other receivables (note 3)
    
    
    20,236
    
    
    
    13,773Inventories (note 4)
    
    
    32,387
    
    
    
    52,216Prepaid expenses and other
    
    
    1,917
    
    
    
    1,607152,094
    
    
    
    87,400Inventories  ore in stockpiles (note 4)
    
    
    2,204
    
    
    
    1,530Investments (note 5)
    
    
    2,955
    
    
    
    10,605Prepaid expenses and other
    
    
    104
    
    
    
    287Restricted cash and investments (note 6)
    
    
    22,946
    
    
    
    21,656Property, plant and equipment (note 7)
    
    
    714,458
    
    
    
    691,039Intangibles (note 8)
    
    
    3,794
    
    
    
    4,436Goodwill (note 9)
    
    
    53,919
    
    
    
    51,028$
    952,474
    
    
    $
    867,981LIABILITIESCurrentAccounts payable and accrued liabilities
    
    $
    13,753
    
    
    $
    9,508Current portion of long-term liabilities:Post-employment benefits (note 10)
    
    
    402
    
    
    
    380Reclamation and remediation obligations (note 11)
    
    
    641
    
    
    
    752Debt obligations (note 12)
    
    
    200
    
    
    
    869Other long-term liabilities (note 13)
    
    
    
    
    
    
    31314,996
    
    
    
    11,822Deferred revenue
    
    
    3,339
    
    
    
    3,187Provision for post-employment benefits (note 10)
    
    
    3,617
    
    
    
    3,426Reclamation and remediation obligations (note 11)
    
    
    16,924
    
    
    
    17,154Debt obligations (note 12)
    
    
    205
    
    
    
    195Other long-term liabilities (note 13)
    
    
    1,105
    
    
    
    1,051Future income tax liability (note 14)
    
    
    106,183
    
    
    
    102,918146,369
    
    
    
    139,753SHAREHOLDERS EQUITYShare capital (note 15)
    
    
    910,484
    
    
    
    849,488Share purchase warrants (note 16)
    
    
    5,830
    
    
    
    5,830Contributed surplus (notes 17 and 18)
    
    
    41,658
    
    
    
    39,922Deficit
    
    
    (256,729
    )
    
    
    (242,494
    )Accumulated other comprehensive income (note 19)
    
    
    104,862
    
    
    
    75,482806,105
    
    
    
    728,228$
    952,474
    
    
    $
    867,981Issued and outstanding common shares (note 15)
    
    
    366,200,665
    
    
    
    339,720,415
 
 On Behalf of the Board of Directors:
 Ron F. Hochstein

Director
    
    
    
    Catherine J. G. Stefan

Director
   - 4 -




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##### 



DENISON MINES CORP.
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009REVENUES(note 21)
    
    $
    128,320
    
    
    $
    79,170EXPENSESOperating expenses (note 20)
    
    
    122,549
    
    
    
    98,145Sales royalties and capital taxes
    
    
    2,325
    
    
    
    1,675Mineral property exploration
    
    
    7,526
    
    
    
    10,120General and administrative
    
    
    14,312
    
    
    
    13,883Stock option expense (note 18)
    
    
    1,831
    
    
    
    3,847Mineral properties impairment (note 7)
    
    
    
    
    
    
    100,000Intangibles impairment (note 8)
    
    
    
    
    
    
    359Goodwill impairment (note 9)
    
    
    
    
    
    
    22,136148,543
    
    
    
    250,165Loss from operations
    
    
    (20,223
    )
    
    
    (170,995
    )Other income (expense) (note 20)
    
    
    5,812
    
    
    
    (14,551
    )Loss before taxes
    
    
    (14,411
    )
    
    
    (185,546
    )Income tax recovery (expense) (note 14):Current
    
    
    (355
    )
    
    
    1,691Future
    
    
    531
    
    
    
    36,843Net loss for the year
    
    $
    (14,235
    )
    
    $
    (147,012
    )Net loss per shareBasic
    
    $
    (0.04
    )
    
    $
    (0.51
    )Diluted
    
    $
    (0.04
    )
    
    $
    (0.51
    )Weighted-average number of shares outstanding (in thousands)Basic
    
    
    340,826
    
    
    
    286,421Diluted
    
    
    340,826
    
    
    
    286,421
   - 5 -




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##### 



DENISON MINES CORP.
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009Share capitalBalance at beginning of year
    
    $
    849,488
    
    
    $
    666,278New shares issued-net of issue costs
    
    
    61,091
    
    
    
    185,034New shares issued under stock option plans
    
    
    159
    
    
    
    Fair value of stock options exercised
    
    
    95
    
    
    
    Renunciation of flow-through share liabilities
    
    
    (349
    )
    
    
    (1,824
    )Balance at end of year
    
    $
    910,484
    
    
    $
    849,488Share purchase warrantsBalance at beginning of year
    
    $
    5,830
    
    
    $
    11,728Warrants expired
    
    
    
    
    
    
    (5,898
    )Balance at end of year
    
    $
    5,830
    
    
    $
    5,830Contributed surplusBalance at beginning of year
    
    $
    39,922
    
    
    $
    30,537Stock-based compensation expense
    
    
    1,831
    
    
    
    3,847Fair value of stock options exercised
    
    
    (95
    )
    
    
    Warrants expired
    
    
    
    
    
    
    5,898Warrants expired-tax effect
    
    
    
    
    
    
    (360
    )Balance at end of year
    
    $
    41,658
    
    
    $
    39,922DeficitBalance at beginning of year
    
    $
    (242,494
    )
    
    $
    (95,482
    )Net loss for the year
    
    
    (14,235
    )
    
    
    (147,012
    )Balance at end of year
    
    $
    (256,729
    )
    
    $
    (242,494
    )Accumulated other comprehensive income (loss)Balance at beginning of year
    
    $
    75,482
    
    
    $
    (4,709
    )Unrealized gain (loss) on investments change-net of tax
    
    
    (2,490
    )
    
    
    3,368Foreign currency translation change
    
    
    31,870
    
    
    
    76,823Balance at end of year
    
    $
    104,862
    
    
    $
    75,482Total shareholders equity
    
    $
    806,105
    
    
    $
    728,228Comprehensive income (loss)Net loss for the year
    
    $
    (14,235
    )
    
    $
    (147,012
    )Unrealized gain (loss) on investments change-net of tax
    
    
    (2,490
    )
    
    
    3,368Foreign currency translation change
    
    
    31,870
    
    
    
    76,823Comprehensive income (loss) for the year
    
    $
    15,145
    
    
    $
    (66,821
    )
   - 6 -




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##### 



DENISON MINES CORP.
 Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,2010
    
    
    2009CASH PROVIDED BY (USED IN):OPERATING ACTIVITIESNet loss for the year
    
    $
    (14,235
    )
    
    $
    (147,012
    )Items not affecting cash:Depletion, depreciation, amortization and accretion
    
    
    60,598
    
    
    
    36,324Investments impairment
    
    
    181
    
    
    
    149Mineral properties impairment
    
    
    
    
    
    
    100,000Intangibles impairment
    
    
    
    
    
    
    359Goodwill impairment
    
    
    
    
    
    
    22,136Stock-based compensation
    
    
    1,831
    
    
    
    3,847Gains on asset disposals
    
    
    (2,739
    )
    
    
    (5,679
    )Losses (gains) on restricted investments
    
    
    (207
    )
    
    
    809Non-cash inventory adjustments
    
    
    (12,655
    )
    
    
    4,290Future income tax recovery
    
    
    (531
    )
    
    
    (36,843
    )Foreign exchange
    
    
    8,003
    
    
    
    17,476Net change in non-cash working capital
items (note 20)
    
    
    (4,695
    )
    
    
    (38,298
    )Net cash provided by (used in) operating activities
    
    
    35,551
    
    
    
    (42,442
    )INVESTING ACTIVITIESDecrease (increase) in notes receivable
    
    
    (880
    )
    
    
    200Purchase of investments
    
    
    (17
    )
    
    
    (711
    )Proceeds from sale of investments
    
    
    8,118
    
    
    
    11,128Expenditures on property, plant and equipment
    
    
    (27,310
    )
    
    
    (38,850
    )Proceeds from sale of property, plant and equipment
    
    
    1,566
    
    
    
    1,914Increase in restricted cash and investments
    
    
    (949
    )
    
    
    (797
    )Net cash used in investing activities
    
    
    (19,472
    )
    
    
    (27,116
    )FINANCING ACTIVITIESDecrease in debt obligations
    
    
    (685
    )
    
    
    (99,620
    )Issuance of common shares for cash:New share issues
    
    
    61,091
    
    
    
    185,034Exercise of stock options and warrants
    
    
    159
    
    
    
    Net cash provided by financing activities
    
    
    60,565
    
    
    
    85,414Net increase in cash and cash equivalents
    
    
    76,644
    
    
    
    15,856Foreign exchange effect on cash and cash equivalents
    
    
    1,106
    
    
    
    742Cash and cash equivalents, beginning of year
    
    
    19,804
    
    
    
    3,206Cash and cash equivalents, end of year
    
    $
    97,554
    
    
    $
    19,804Cash and cash equivalents comprised of:Cash
    
    
    46,846
    
    
    
    19,804Cash equivalents
    
    
    50,708
    
    
    
    $
    97,554
    
    
    $
    19,804Supplemental cash flow disclosure:Interest paid
    
    
    27
    
    
    
    1,576Income taxes paid (recovered)
    
    
    (1,369
    )
    
    
    450
   - 7 -




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##### 



DENISON MINES CORP.
 1.
    
    NATURE OF OPERATIONS
 Denison 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 processing uranium bearing waste materials, referred to as alternate feed
materials.Denison Mines Inc. (DMI), a subsidiary of DMC, 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 2010 and 2009 refer to the year ended December 31, 2010 and the year ended
December 31, 2009 respectively.
 2.
    
    SUMMARY OF SIGNIFICANT MINING INTERESTS AND ACCOUNTING POLICIES
 Basis of PresentationThese consolidated financial statements have been prepared by management in U.S. dollars, unless
otherwise stated, in accordance with Canadian generally accepted accounting principles
(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 27.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, 2010:
 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
    %
  - 8 -




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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 ConsolidationThese consolidated financial statements include the accounts of DMC, its subsidiaries and its
share of assets, liabilities, revenues and expenses of jointly-controlled companies and
unincorporated ventures proportionate to the Companys percentage ownership or participating
interest. All significant intercompany balances and transactions have been eliminated on
consolidation.The companies and ventures controlled by DMC are consolidated using the full consolidation
method. Control is defined as the direct or indirect power to govern a companys financing,
investing and strategic operating policies without co-operation of others in order to benefit
from its activities.The companies and ventures jointly controlled by DMC are consolidated using the proportionate
consolidation method. Joint control is deemed to exist when agreements exist that require that
material changes to the operating, investing and financing policies of such company or venture
be approved by a percentage of the participating interest sufficiently high enough to prevent
any one participant from exercising unilateral control.The companies and ventures in which DMC exercises significant influence over financial policy
and management (associates) are accounted for using the equity method. In determining whether
significant influence exists, the Company evaluates a number of criteria including the
percentage of voting interest held, and representation on the board of directors or in senior
management.Variable Interest Entities (VIEs) (which include, but are not limited to, special purpose
entities, trusts, partnerships and other legal structures) are consolidated by the Company if it
is the primary beneficiary who will absorb the majority of the entities expected losses and / or
expected residual returns.b) Use of EstimatesThe presentation of consolidated financial statements in conformity with Canadian GAAP requires
the Companys management to make estimates and assumptions that affect the amounts reported in
these financial statements and related note disclosures. Although the Company regularly reviews
the estimates and assumptions that affect these financial statements, actual results may be
materially different. Significant estimates and assumptions made by management relate to the
quantities and net realizable value of inventories, assumptions used in impairment testing and
valuation of long-lived assets, determination of reporting units and the valuation of reporting
units for goodwill determination, determination of useful lives, recoverability of and
reclamation obligations for property, plant and equipment and the evaluation of post-employment
benefits, future income taxes, contingent liabilities and stock-based compensation.c) Foreign Currency TranslationThe Companys currency of measurement for its Canadian operations is the Canadian dollar. As
the Companys reporting currency is the U.S. dollar, the Company applies the current rate method
for translation of the Companys net investment in its self sustaining Canadian operations.
Assets and liabilities denominated in currencies other than the U.S. dollar are translated at
the exchange rate in effect at the balance sheet date. Revenues and expenses denominated in
currencies other than the U.S. dollar are translated at the average rate in effect during the
period. Foreign currency translation gains and losses are recorded in accumulated other
comprehensive income which will be recognized in the results of operations upon the dilution or
other reduction in equity of the net investment.The Companys fully integrated subsidiaries are translated into US dollars using the temporal
method. Under this method, monetary assets and liabilities are translated at the year-end
exchange rate and all other assets and liabilities are translated at applicable historical
exchange rates. Revenue and expense items are translated at the rate of exchange in effect at
the date the transactions are recognized in income. Realized exchange gains and losses and
currency translation adjustments are included in the results of operations as a component of
Other income (expense). Foreign currency transactions are translated using the exchange rates
prevailing at the rate of exchange in effect at the date the transactions are recognized in
income. Foreign exchange gains and losses resulting from the settlement of such transactions and
from the translation of monetary assets and liabilities denominated in foreign currencies are
included in the results of operations.
  - 9 -




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##### 



d) Income TaxesIncome taxes are accounted for using the liability method of accounting for future income taxes.
Under this method, current income taxes are recognized for the estimated income taxes payable
for the current period. Future 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 using enacted or substantively enacted tax
rates expected to apply to taxable income during the years in which the differences are expected
to be recovered or settled. The recognition of future income tax assets such as tax losses
available for carry forward are limited to the amount that is more likely than not to be
realized.e) Flow-Through Common SharesThe 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 foregone tax benefits to
the Company are recognized by reducing the proceeds received from these financings by the tax
effects of the renunciation to the subscribers at the time of renunciation by the Company.f) Cash and Cash EquivalentsCash and cash equivalents consist of cash on deposit and highly-liquid, short-term money market
instruments which, on acquisition, have terms to maturity of three months or less. Cash and
cash equivalents which are subject to restrictions that prevent its use for current purposes are
classified as restricted cash and cash equivalents.g) InventoriesExpenditures, including depreciation, depletion and amortization of assets, incurred in the
mining and processing activities that will result in 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 cost 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 ton or 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.Mine and mill supplies are valued at the lower of average cost and net realizable value as
measured by replacement cost.h) InvestmentsEquity investments over which the Company does not exercise significant influence are accounted
for as available for sale securities.Equity investments over which the Company exercises significant influence are accounted for
using the equity method, whereby the investment is initially recorded at cost and adjusted to
recognize the Companys share of earnings or losses, reduced by dividends and distributions
received.i) Property, Plant and EquipmentProperty, plant and equipmentProperty, plant and equipment are recorded at acquisition or production cost and carried net of
depreciation and impairment, if applicable. 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 fifteen 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.
  - 10 -




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##### 



Mineral Property Acquisition, Exploration and Development CostsMineral property costs include acquisition costs relating to acquired mineral use and
exploration rights and are capitalized.Exploration and development 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, 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.Impairment of Long-Lived AssetsLong-lived assets are assessed by management for impairment whenever events or changes in
circumstances indicate that the related carrying amounts may not be recoverable. To test
recoverability, the net book value of the long-lived asset is compared to the estimated
undiscounted future cash flows generated by their use and eventual disposal. Impairment is
measured as the excess of the carrying value over the fair value, determined principally by
discounting the estimated net future cash flows expected to be generated from the use and
eventual disposal of the related asset. In the event that the Company has insufficient
information about the long-lived asset to estimate future cash flows to test the recoverability
of the capitalized cost amounts, the Company will test for impairment by comparing the fair
value to the carrying amount without first performing a test for recoverability.j) Asset Retirement ObligationsAsset retirement obligations, any statutory, contractual or other legal obligation related to
the retirement of tangible long-lived assets, are recognized when such obligations are incurred,
if a reasonable estimate of fair value can be determined. These obligations are measured
initially at fair value 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 are immediately recognized as an increase or decrease
in the carrying amounts of the liability and related assets. 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 residual
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.k) GoodwillBusiness combinations are accounted for under the purchase method of accounting whereby acquired
assets and liabilities are recorded at fair value as of the date of acquisition. The excess of
the purchase price over the fair value is recorded as goodwill and allocated to the applicable
reporting unit. Goodwill is tested annually for impairment or more frequently if current events
or changes in circumstances indicate that the carrying value of the goodwill of a reporting unit
may exceed its fair value. A two-step impairment test is used to identify potential impairment
in goodwill and to measure the amount of goodwill impairment, if any. In the first step, the
fair value of a reporting unit is compared with its carrying value, including goodwill. When the
fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is
considered not to be impaired and the second step
of the impairment test is not undertaken.
When the carrying amount of a reporting unit exceeds its fair value, the fair value of the
reporting units goodwill (determined on the same basis as the value of goodwill is determined in
a business combination) is compared with its carrying amount to measure the amount of the
impairment loss, if any. When the carrying amount of reporting unit goodwill exceeds the fair
value of the goodwill, an impairment loss is recognized in an amount equal to the excess.
  - 11 -




---



##### 



l) Post-Employment BenefitsThe 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 on immediate pension 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.m) Revenue RecognitionRevenue from the sale of mineral concentrates to customers is recognized when persuasive
evidence of an arrangement exists, delivery has occurred under the terms of the arrangement, the
price is fixed or determinable and collection is reasonably assured. For uranium, revenue is
typically recognized when delivery is effected by book transfer at the applicable uranium
storage facility. For vanadium related products, revenue is typically recognized at the time of
shipment to the customer.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 from alternate feed process milling is recognized as material is processed, in
accordance with the specifics of the applicable processing agreement. In general, the Company
collects a recycling fee for receipt of the material and/or receives the proceeds from the sale
of any uranium concentrate and other metals produced. Deferred revenues represent processing
proceeds received on delivery of materials but in advance of the required processing activity.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 UF6 on behalf of UPC is recognized on the date when title passes to or from
UPC.n) Stock-Based CompensationThe Company uses a fair value-based method of accounting for stock options granted to employees,
including directors, and to non-employees. The fair value of stock options granted is
recognized on a straight-line basis 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.o) Earnings (Loss) per ShareBasic earnings (loss) per share is computed by dividing net income (loss) for the period by the
weighted-average number of common shares outstanding for the period. The Company follows the
treasury stock method in the calculation of diluted earnings per share. Under this method,
the calculation of diluted earnings per share assumes that the proceeds to be received from the
exercise of in the money stock options and warrants are applied to repurchase common shares at
the average market price for the period. The diluted loss per share is equal to the basic loss
per share due to the anti-dilutive effect of the stock options and other dilutive securities.p) Financial Instruments  Recognition and Measurement / Presentation and DisclosureFinancial assets and financial liabilities are recognized on the Consolidated Balance Sheet when
the Company becomes a party to the contractual provisions of the financial instrument. All
financial instruments are required to be measured at fair value on initial recognition except
for certain financial instruments that arise in related party transactions. Measurement in
subsequent periods is dependent upon the classification of the financial instrument

as
held-for-trading, available-for-sale, loans and receivables, held-to-maturity, or other
financial liabilities. The held-for-trading classification is applied when an entity is
trading in an instrument or alternatively the standard permits that any financial instrument
be irrevocably designated as held-for-trading. For financial instruments
classified as other than held-for-trading, transaction costs are added to the initial fair value
of the related financial instrument.
  - 12 -




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##### 



Financial assets and financial liabilities classified as held-for-trading are measured at fair
value with changes in those fair values recognized on the Consolidated Statement of Operations.
Financial assets classified as available-for-sale are measured at fair value with changes in
those fair values recognized in other comprehensive income. Financial assets classified as
loans and receivables, held to maturity or other financial liabilities are measured at amortized
cost using the effective interest rate method of amortization. Where a financial asset
classified as held-to-maturity or available-for-sale has a loss in value which is considered to
be other than temporary, the loss is recognized in the results of operations.For financial instruments measured at amortized cost, transaction costs or fees, premiums or
discounts earned or incurred are recorded, at inception, net against the fair value of the
financial instrument. Interest expense is recorded using the effective interest method.The Company has implemented the following classifications:
 
    
    Cash and cash equivalents (including restricted cash and investments) 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 AdoptedThe Company adopted the following new accounting standards issued by the CICA Handbook effective
January 1, 2010:
 a)
    
    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. The Company has early adopted all three
sections effective January 1, 2010. There was no impact to the Companys financial
statements from adopting these standards.
 Accounting Standards Issued but not yet AdoptedThe CICA has issued the following accounting standards effective for the fiscal years beginning
on or after January 1, 2011:
 a)
    
    In February 2008, the Accounting Standards Board announced that Canadian publicly
accountable enterprises will be required to adopt International Financial Reporting
Standards (IFRS) effective January 1, 2011. As a result, the Company will publish its
first consolidated financial statements, prepared in accordance with IFRS, for the quarter
ending March 31, 2011. The Company will also provide comparative data on an IFRS basis
including an opening balance sheet as at January 1, 2010.
  - 13 -




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##### 



Comparative NumbersCertain classifications of the comparative figures have been changed to conform to those used in
the current period.
 3.
    
    TRADE AND OTHER RECEIVABLES
 The trade and other receivables balance consists of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Trade receivablesmineral concentrate sales
    
    $
    5,631
    
    
    $
    9,422Trade receivables-other
    
    
    6,903
    
    
    
    2,114Trade and other receivables in joint ventures
    
    
    375
    
    
    
    928Sales tax receivables
    
    
    228
    
    
    
    1,127Sundry receivables
    
    
    6,242
    
    
    
    182Note and lease receivables
    
    
    857
    
    
    
    $
    20,236
    
    
    $
    13,773
 4.
    
    INVENTORIES
 The inventories balance consists of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Uranium concentrates and work-in-progress (1)
    
    $
    9,769
    
    
    $
    19,921Vanadium concentrates and work-in-progress (2)
    
    
    4,390
    
    
    
    442Inventory of ore in stockpiles
    
    
    14,772
    
    
    
    28,366Mine and mill supplies
    
    
    5,660
    
    
    
    5,017$
    34,591
    
    
    $
    53,746Inventoriesby duration:Current
    
    $
    32,387
    
    
    $
    52,216Long-termore in stockpiles
    
    
    2,204
    
    
    
    1,530$
    34,591
    
    
    $
    53,746
 (1)
    
    The Uranium concentrates and work-in-progress inventory is presented net of a
write-down of $nil as at December 31, 2010 and $5,910,000 as at December 31, 2009.(2)
    
    The Vanadium concentrates and work-in-progress inventory is presented net of a
write-down of $21,000 as at December 31, 2010 and $7,302,000 as at December 31, 2009. Operating expenses include recoveries of $13,191,000 and write-downs of $3,712,000 relating to
the change in the net realizable value provisions of the Companys uranium and vanadium
inventories for the years ending December 31, 2010 and 2009 respectively.Long-term ore in stockpile inventory represents an estimate of the amount of pounds on the
stockpile in excess of the next twelve months of planned mill production.
  - 14 -




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##### 



5.
    
    INVESTMENTS
 The investments balance consists of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009InvestmentsAvailable for sale securities at fair value
    
    $
    2,955
    
    
    $
    10,605$
    2,955
    
    
    $
    10,605
 At December 31, 2010, investments consist of equity instruments of three publicly-traded
companies at a fair value of $2,955,000 (December 31, 2009: $10,605,000).Investment SalesDuring 2010, the Company sold equity interests in three public companies for cash consideration
of $8,118,000. The resulting gain of $3,333,000 has been included in other income (expense) in
the consolidated statements of operations (see note 20).During 2009, the Company sold equity interests in three public companies for cash consideration
of $11,128,000. The resulting gain of $5,532,000 has been included in other income (expense) in
the consolidated statements of operations (see note 20).Investment PurchasesDuring 2010, the Company acquired additional equity interests in one public company at a cost of
$17,000.During 2009, the Company acquired additional equity interests in two public companies at a cost
of $711,000.Investment ImpairmentsDuring 2010, the Company recorded impairment charges of $181,000 on its investments (see note
20).During 2009, the Company recorded impairment charges of $149,000 on its investments (see note
20).
 6.
    
    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:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Cash
    
    $
    504
    
    
    $
    23Cash equivalents
    
    
    6,459
    
    
    
    3,066Investments
    
    
    15,983
    
    
    
    18,567$
    22,946
    
    
    $
    21,656Restricted cash and investments  by item:U.S. mill and mine reclamation
    
    $
    20,315
    
    
    $
    19,564Elliot Lake reclamation trust fund
    
    
    2,631
    
    
    
    2,092$
    22,946
    
    
    $
    21,656
 U.S. Mill and Mine ReclamationThe Company has cash and cash equivalents and fixed income securities as collateral for various
bonds posted in favour of the State of Utah and the applicable state regulatory agencies in
Colorado and Arizona and the U.S. Bureau of Land Management for estimated reclamation costs
associated with the White Mesa mill and U.S. mining properties. In 2010, the Company had not
deposited any additional monies into its collateral account (2009: $nil).
  - 15 -




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##### 



Elliot Lake Reclamation Trust FundThe Company has the obligation to maintain its decommissioned Elliot Lake uranium mine pursuant
to a Reclamation Funding Agreement effective September 30, 1994 (Agreement) with the
Governments of Canada and Ontario. The Agreement requires the Company to deposit 90% of cash
flow, after deducting permitted expenses, into the Reclamation Trust Fund. A subsequent
amendment to the Agreement provides for the suspension of this obligation to deposit 90% of cash
flow into the Reclamation Trust Fund, provided funds are maintained 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 2010, the Company withdrew $918,000
(CDN$950,000) (2009: $943,000 (CDN$1,034,000)) and deposited an additional $1,313,000
(CDN$1,358,000) into the Elliot Lake Reclamation Trust Fund (2009: $1,109,000 (CDN$1,352,000)).
 7.
    
    PROPERTY, PLANT AND EQUIPMENT
 Property, plant and equipment consist of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Plant and equipment:Cost
    
    $
    182,523
    
    
    $
    172,675Construction-in-progress
    
    
    21,376
    
    
    
    11,861Accumulated depreciation
    
    
    (38,638
    )
    
    
    (27,915
    )$
    165,261
    
    
    $
    156,621Mineral properties:Cost
    
    $
    721,338
    
    
    $
    686,457Impairment
    
    
    (103,441
    )
    
    
    (103,441
    )Accumulated amortization
    
    
    (68,700
    )
    
    
    (48,598
    )$
    549,197
    
    
    $
    534,418Net book value
    
    $
    714,458
    
    
    $
    691,039Net book valuecontinuity summary:Opening
    
    $
    691,039
    
    
    $
    717,433Additions
    
    
    30,909
    
    
    
    44,254Depreciation and amortization
    
    
    (28,983
    )
    
    
    (27,171
    )Impairment
    
    
    
    
    
    
    (100,000
    )Write-down
    
    
    
    
    
    
    (382
    )Disposals
    
    
    (2,159
    )
    
    
    (1,371
    )Reclamation asset adjustment
    
    
    448
    
    
    
    349Foreign exchange
    
    
    23,204
    
    
    
    57,927$
    714,458
    
    
    $
    691,039
 Plant and Equipment  MiningThe Company has a 100% interest in the White Mesa mill located in Utah and mines located in
Arizona, Colorado and Utah. Mined ore from these mines is processed at the White Mesa mill.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
throughout 2011 and into 2012. A toll milling agreement has been signed with the participants
in the Cigar Lake joint venture that provides for the processing of a substantial portion 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 future toll milling mill feed.During 2009, the Company recorded a write-down of $382,000 associated with the planned disposal
of certain of its mining equipment at its McClean Lake mining operation. During 2010, the
Company completed the disposal of this equipment for proceeds of $1,455,000. The resulting
realized loss on disposal of $468,000 has been included in the amount reported in other income
(expense) in the consolidated statements of operations.
  - 16 -




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##### 



Plant and Equipment  Services and OtherThe environmental services division of the Company provides mine decommissioning and
decommissioned site monitoring services for third parties.Mineral PropertiesThe Company has various interests in development and exploration projects located in Canada, the
U.S., Mongolia and Zambia which are held directly or through option or joint venture agreements.
Amounts spent on development projects are capitalized as mineral property assets. Exploration
projects are expensed.The most significant of the Companys mineral property interests are as follows:CanadaThe 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. These projects are in
the development stage.Other significant mineral property interests that the Company has in Canada but which are not
yet in the development stage include:
 a)
    
    Wheeler River  the Company has a 60% interest in the project (located in the
Athabasca Basin);b)
    
    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;c)
    
    Wolly  the Company has a 22.5% interest in the project (located in the Athabasca
Basin); andd)
    
    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 six years to earn an additional 26% interest. As
at December 31, 2010, the Company has incurred a total of CDN$4,218,000 towards the option
and has earned a 49% ownership interest in the project under the phase-in ownership
provisions of the agreement.
 United StatesThe Company has 100% interests in various mines in the Colorado Plateau, Arizona Strip and Henry
Mountains mining districts located in Colorado, Arizona and Utah which are either in operations,
development or on standby.MongoliaThe Company has a 70% interest in and is the managing partner of the Gurvan Saihan Joint Venture
in Mongolia. The results of the Gurvan Saihan Joint Venture have been included in these
financial statements on a consolidated basis since the Company exercises control.ZambiaThe Company has a 100% interest in the Mutanga project located in Zambia.In 2009, the Company tested the Mutanga project mineral property for impairment as a result of
additional information becoming available concerning estimated mining recoveries within the
current mine plan, increases in project cost estimates and a decline in the long term uranium
price outlook at the time. The carrying value of the project failed the stage one impairment
test based on the revised outlook. As a result, the Company undertook a stage two impairment
test and assessed the fair value of the Mutanga project by estimating the value of the projects
resource potential based on published market value comparables for companies operating in a
similar geographical area. The Company assessed the comparability of the market value data by
looking at the nature of the mineral properties held by the other companies including the size,
stage of exploration and development, forecast cost structure, estimated grade and political
stability of the country in which the projects are located to determine an appropriate fair
value.The Company recorded a pre-tax impairment charge of $100,000,000 representing the excess of
carrying value of the mineral property over the fair value derived during the stage two
impairment test. The impairment charge has been recorded in the Africa mining segment (see note
21). The Company also recorded a $30,000,000 future tax recovery as a result of the impairment
charge.
  - 17 -




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##### 



8.
    
    INTANGIBLES
 Intangibles consist of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Cost
    
    $
    8,189
    
    
    $
    7,791Impairment
    
    
    (359
    )
    
    
    (359
    )Accumulated amortization
    
    
    (4,036
    )
    
    
    (2,996
    )$
    3,794
    
    
    $
    4,436Net book value-by item:UPC management services agreementCost
    
    
    7,439
    
    
    
    7,041Accumulated amortization
    
    
    (3,645
    )
    
    
    (2,605
    )Urizon technology licensesCost
    
    
    750
    
    
    
    750Accumulated amortization and impairment
    
    
    (750
    )
    
    
    (750
    )$
    3,794
    
    
    $
    4,436Net book valuecontinuity summaryOpening
    
    $
    4,436
    
    
    $
    4,978Impairment
    
    
    
    
    
    
    (359
    )Amortization
    
    
    (862
    )
    
    
    (855
    )Foreign exchange
    
    
    220
    
    
    
    672$
    3,794
    
    
    $
    4,436
 UPC Management Services AgreementThe UPC management services agreement is associated with the acquisition of DMI in 2006. The
contract is being amortized over its 8 year estimated useful life.Urizon Technology LicensesThe Company has a 50% interest in a joint venture with Nuclear Fuel Services, Inc. (NFS) (the
Urizon joint venture). The purpose of the joint venture is to pursue an alternate feed
program for the White Mesa mill which is focused on a portion of the U.S. Department of Energy
(DOE) excess uranium inventories. NFS contributed its technology license to the joint venture
while the Company contributed $1,500,000 in cash together with its technology license. The
accounts of Urizon have been included in the Companys consolidated financial statements on a
proportionate consolidation basis. The joint venture has no cash flows arising from investing
or financing activities. This Urizon technology license represents the Companys 50% interest
in Urizons technology licenses.As at December 31, 2009, the DOE material has not yet been processed and remains a component of
the DOE uranium management plan. Due to delays and uncertainty in the DOEs plans for the
management of this material and the fact that the Urizon program may not ultimately be the
chosen disposition option, the Company has recorded a pre-tax impairment charge of $359,000 in
2009 to adjust the carrying value of the Urizon Technology license to $nil. The impairment
charge has been recorded in the U.S mining segment (see note 21).
  - 18 -




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##### 



9.
    
    GOODWILL
 A continuity summary of goodwill is presented below:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Goodwill, beginning of year
    
    $
    51,028
    
    
    $
    63,240Impairment charge
    
    
    
    
    
    
    (22,136
    )Foreign exchange
    
    
    2,891
    
    
    
    9,924Goodwill, end of year
    
    $
    53,919
    
    
    $
    51,028Goodwill-by business unit:Canada mining segment
    
    $
    53,919
    
    
    $
    51,028
 The Companys acquisition of DMI in 2006 was accounted for using the purchase method. The
excess of the purchase price over the fair value of the net assets acquired has been recorded as
goodwill. Under GAAP, goodwill is not amortized and is tested annually for impairment. The
goodwill has been allocated to the Companys Canadian mining segment.In 2009, based on managements revised outlook for its Canada mining segment, the Company
recorded an impairment charge of $22,136,000 representing the carrying value of the goodwill in
excess of fair value. Fair value was determined by using estimated future net cash flows which
included estimated recoverable reserves, future consensus prices, future foreign exchange rates
and estimated operating and capital costs.
 10.
    
    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 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 -




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##### 



Post-employment benefits consist of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Accrued benefit obligation
    
    $
    3,820
    
    
    $
    3,594Unamortized experience gain
    
    
    199
    
    
    
    212$
    4,019
    
    
    $
    3,806Post-employment benefits liability-by duration:Current
    
    $
    402
    
    
    $
    380Non-current
    
    
    3,617
    
    
    
    3,426$
    4,019
    
    
    $
    3,806Post-employment liabilitycontinuity summary:Opening
    
    $
    3,806
    
    
    $
    3,357Benefits paid
    
    
    (266
    )
    
    
    (281
    )Interest cost
    
    
    286
    
    
    
    221Amortization of experience gain
    
    
    (24
    )
    
    
    (18
    )Foreign exchange
    
    
    217
    
    
    
    527$
    4,019
    
    
    $
    3,806
 The unamortized experience gain is being amortized on a straight-line basis over the average
life expectancy of the retiree group of 10.7 years as per the December 1, 2008 actuarial
valuation.
 11.
    
    RECLAMATION AND REMEDIATION OBLIGATIONS
 Reclamation and remediation obligations consist of:
 December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Reclamation and remediation liability-by location:U.S. Mill and Mines
    
    $
    6,383
    
    
    $
    8,609Elliot Lake
    
    
    9,451
    
    
    
    8,155McClean Lake and Midwest Joint Ventures
    
    
    1,731
    
    
    
    1,142$
    17,565
    
    
    $
    17,906Reclamation and remediation liabilityby duration:Current
    
    $
    641
    
    
    $
    752Non-current
    
    
    16,924
    
    
    
    17,154$
    17,565
    
    
    $
    17,906Reclamation and remediation liability-continuity
summary:Opening
    
    $
    17,906
    
    
    $
    19,346Accretion
    
    
    1,309
    
    
    
    1,482Expenditures incurred
    
    
    (1,249
    )
    
    
    (1,051
    )Liability adjustments  income statement
    
    
    (1,391
    )
    
    
    (3,478
    )Liability adjustments   balance sheet
    
    
    448
    
    
    
    350Foreign exchange
    
    
    542
    
    
    
    1,257$
    17,565
    
    
    $
    17,906
 Site Restoration: U.S. Mill and MinesThe 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 current estimates for the White Mesa mill and U.S.
mines are $4,091,000 (2009: $6,054,000) and $2,292,000 (2009: $2,555,000), respectively. The
above accrual represents the Companys best estimate of the present value of future reclamation
costs, discounted at rates ranging from 6.19% to 7.17% (2009: 6.75% to
7.50%). The undiscounted amount of estimated future reclamation costs is $34,972,000 (2009:
$28,033,000). Reclamation costs are expected to be incurred between 2012 and 2040.
  - 20 -




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##### 



Site Restoration: Elliot LakeThe 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 6.48%
(2009: 7.0%). The undiscounted amount of estimated future reclamation costs is $51,080,000
(CDN$50,806,000) (2009: $46,964,000 (CDN$49,358,000)).Spending on restoration activities at the Elliot Lake site is funded from monies in the Elliot
Lake Reclamation Trust fund (see note 6).Site Restoration: McClean Lake Joint Venture and Midwest Joint VentureThe 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 6.48% (2009: 7.0%). The undiscounted amount of estimated
future reclamation costs is $19,705,000 (CDN$19,599,000) (2009: $20,421,000 (CDN$21,461,000)).
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. The Company has provided
irrevocable standby letters of credit, from a chartered bank, in favour of Saskatchewan
Environment, totalling CDN$9,698,000.
 12.
    
    DEBT OBLIGATIONS
 Debt obligations consist of:
 At December 31
    
    
    At December 31(in thousands)
    
    2010
    
    
    2009Notes payable and other financing
    
    $
    405
    
    
    $
    1,064$
    405
    
    
    $
    1,064Debt obligationsby duration:Current
    
    
    200
    
    
    
    869Non-current
    
    
    205
    
    
    
    195$
    405
    
    
    $
    1,064
 Revolving Line of CreditThe Company has in place a $60,000,000 revolving term credit facility (the facility) with the
Bank of Nova Scotia. The maturity date of the facility is June 30, 2011.The facility contains three financial covenants: one based on maintaining a certain level of
tangible net worth, a second requiring a minimum current ratio to be maintained and the other
requiring the Company to reduce borrowings under the facility to $35,000,000 for a period of
time each quarter before drawing further amounts.The borrower under the facility is DMI and 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. In addition, each of
DMCs material U.S subsidiaries has provided an unlimited full recourse guarantee secured by a
pledge of all of its shares and a first-priority security interest in all of its present and
future personal property.
  - 21 -




---



##### 



Scheduled Debt Obligation Maturities
  (in thousands)2011
    
    $
    2002012
    
    
    1112013
    
    
    782014
    
    
    16
 13.
    
    OTHER LONG-TERM LIABILITIES
  At December 31
    
    
    At December 31(in thousands)
    
    2010
    
    
    2009Unamortized fair value of sales contracts
    
    $
    
    
    
    $
    313Unamortized fair value of toll milling contracts
    
    
    1,005
    
    
    
    951Other
    
    
    100
    
    
    
    100$
    1,105
    
    
    $
    1,364Other long-term liabilitiesby duration:Current
    
    
    
    
    
    
    313Non-current
    
    
    1,105
    
    
    
    1,051$
    1,105
    
    
    $
    1,364
   - 22 -




---



##### 



14.
    
    INCOME TAXES
  (in thousands)
    
    2010
    
    
    2009Combined basic tax rate
    
    
    31.0
    %
    
    
    33.0
    %Loss before taxes
    
    $
    (14,411
    )
    
    $
    (185,546
    )Income tax expense (recovery) at basic tax rate
    
    
    (4,467
    )
    
    
    (61,230
    )Non-deductible amounts
    
    
    3,833
    
    
    
    12,569Non-taxable amounts
    
    
    (2,730
    )
    
    
    (3,936
    )Previously unrecognized future tax assets
    
    
    (359
    )
    
    
    (2,579
    )Difference in foreign tax rates
    
    
    2,600
    
    
    
    3,874Change in valuation allowance
    
    
    26
    
    
    
    15,557Impact of legislative changes
    
    
    
    
    
    
    (2,292
    )Other
    
    
    921
    
    
    
    (497
    )Tax recovery per consolidated
financial statements
    
    $
    (176
    )
    
    $
    (38,534
    )
  December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Future income tax assets:Inventory
    
    $
    
    
    
    $
    2,500Property, plant and equipment, net
    
    
    8,646
    
    
    
    9,277Investments
    
    
    
    
    
    
    772Deferred revenue
    
    
    1,378
    
    
    
    1,302Post-employment benefits
    
    
    1,081
    
    
    
    1,015Reclamation and remediation obligations
    
    
    5,643
    
    
    
    5,994Other long-term liabilities
    
    
    270
    
    
    
    367Tax loss carryforwards
    
    
    58,367
    
    
    
    41,687Other
    
    
    9,602
    
    
    
    9,07984,987
    
    
    
    71,993Future income tax liability:Inventory
    
    
    (3,089
    )
    
    
    (918
    )Long-term investments
    
    
    (188
    )
    
    
    (143
    )Property, plant and equipment, net
    
    
    (146,928
    )
    
    
    (132,939
    )Intangibles
    
    
    (1,021
    )
    
    
    (1,182
    )Other
    
    
    (1,877
    )
    
    
    (1,688
    )Future tax liabilities  net
    
    
    (68,116
    )
    
    
    (64,877
    )Valuation allowance
    
    
    (38,067
    )
    
    
    (38,041
    )Net future income tax liabilities
    
    $
    (106,183
    )
    
    $
    (102,918
    )
   - 23 -




---



##### 



AmountCountry
    
    (in thousands)
    
    
    ExpiryAustralia
    
    $
    485
    
    
    UnlimitedCanada
    
    
    39,679
    
    
    2028-2030Mongolia
    
    
    504
    
    
    2011-2018United States
    
    
    112,282
    
    
    2026-2030Zambia
    
    
    5,813
    
    
    2011-2020
  15.
    
    SHARE CAPITAL
  Number ofCommon(in thousands except share amounts)
    
    Shares
    
    
    AmountBalance at December 31, 2008
    
    
    197,295,415
    
    
    $
    666,278Issued for cash:New issue gross proceeds
    
    
    142,425,000
    
    
    
    193,646New issue gross issue costs
    
    
    
    
    
    
    (8,612
    )Renunciation of flow-through share liability
    
    
    
    
    
    
    (1,824
    )142,425,000
    
    
    
    183,210Balance at December 31, 2009
    
    
    339,720,415
    
    
    $
    849,488Issued for cash:New issue gross proceeds
    
    
    26,400,000
    
    
    
    64,769New issue gross issue costs
    
    
    
    
    
    
    (3,678
    )Exercise of stock options
    
    
    80,250
    
    
    
    159Renunciation of flow-through share liability
    
    
    
    
    
    
    (349
    )Fair value of stock options exercised
    
    
    
    
    
    
    9526,480,250
    
    
    
    60,996Balance at December 31, 2010
    
    
    366,200,665
    
    
    $
    910,484
 New Issues
     - 24 -




---



##### 



Flow-Through Share Issues
    16.
    
    SHARE PURCHASE WARRANTS
  Weighted Average
    
    
    Number of
    
    
    Fair(in thousands except share amounts
    
    Exercise Price
    
    
    Common Shares
    
    
    Valueand price per share)
    
    Per Share (CDN$)
    
    
    Issuable
    
    
    AmountBalance outstanding at December 31, 2008
    
    
    8.70
    
    
    
    9,564,915
    
    
    $
    11,728Warrants expired (2)
    
    
    5.21
    
    
    
    (3,156,915
    )
    
    
    (5,898
    )5.21
    
    
    
    (3,156,915
    )
    
    
    (5,898
    )Balance outstanding at December 31, 2009
    
    
    10.42
    
    
    
    6,408,000
    
    
    $
    5,830Balance outstanding at December 31, 2010
    
    
    10.42
    
    
    
    6,408,000
    
    
    $
    5,830Balance exercisable at December 31, 2010
    
    
    10.42
    
    
    
    6,408,000
    
    
    $
    5,830Balance outstanding  by warrant series

March 2006 series (1)
    
    
    10.42
    
    
    
    6,408,000
    
    
    
    5,830Balance outstanding at December 31, 2010
    
    
    10.42
    
    
    
    6,408,000
    
    
    $
    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. Upon expiry, 6,408,000 (or 2,225,000 before
adjusting for the exchange ratio) of the warrants expired unexercised.(2)
    
    The November 2004 series had 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 expired on November 24, 2009. Upon expiry in 2009, 3,156,915 (or 1,096,141
before adjusting for the exchange ratio) of the warrants expired unexercised.
  - 25 -




---



##### 



17. CONTRIBUTED SURPLUS
  December 31,
    
    
    December 31,(in thousands)
    
    2010
    
    
    2009Balance, beginning of year
    
    $
    39,922
    
    
    $
    30,537Stock-based compensation expense (note 18)
    
    
    1,831
    
    
    
    3,847Fair value of stock options exercised
    
    
    (95
    )
    
    
    Warrant expiries
    
    
    
    
    
    
    5,898Warrant expiries-tax
    
    
    
    
    
    
    (360
    )Balance, end of year
    
    $
    41,658
    
    
    $
    39,922
 18.
    
    STOCK OPTIONS
    2010
    
    
    
    
    
    
    2009Weighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseNumber of
    
    
    Price per
    
    
    Number of
    
    
    Price perCommon
    
    
    Share
    
    
    Common
    
    
    ShareShares
    
    
    (CDN $)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding, beginning of year
    
    
    8,084,990
    
    
    $
    2.97
    
    
    
    5,536,384
    
    
    $
    7.11Granted
    
    
    407,000
    
    
    
    1.43
    
    
    
    5,491,500
    
    
    
    2.08Exercised
    
    
    (80,250
    )
    
    
    2.03
    
    
    
    
    
    
    
    Expired
    
    
    (2,125,651
    )
    
    
    3.78
    
    
    
    (2,942,894
    )
    
    
    9.09Stock options outstanding, end of year
    
    
    6,286,089
    
    
    $
    2.61
    
    
    
    8,084,990
    
    
    $
    2.97Stock options exercisable, end of year
    
    
    4,299,671
    
    
    $
    2.85
    
    
    
    4,962,689
    
    
    $
    3.32
  Weighted
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    ExerciseRange of Exercise
    
    Contractual
    
    
    Number of
    
    
    Price perPrices per Share
    
    Life
    
    
    Common
    
    
    Share(CDN$)
    
    (Years)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding$1.37 to $4.99
    
    
    3.47
    
    
    
    5,288,825
    
    
    $
    2.03$5.00 to $9.99
    
    
    3.98
    
    
    
    996,439
    
    
    
    5.72$10.00 to $11.84
    
    
    0.12
    
    
    
    825
    
    
    
    11.84Stock options outstanding, end of year
    
    
    3.55
    
    
    
    6,286,089
    
    
    $
    2.61
  - 26 -




---



##### 



Weighted
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    ExerciseRange of Exercise
    
    Contractual
    
    
    Number of
    
    
    Price perPrices per Share
    
    Life
    
    
    Common
    
    
    Share(CDN$)
    
    (Years)
    
    
    Shares
    
    
    (CDN $)Stock options outstanding$1.37 to $4.99
    
    
    4.38
    
    
    
    6,609,675
    
    
    $
    2.07$5.00 to $9.99
    
    
    4.93
    
    
    
    1,107,639
    
    
    
    5.71$10.00 to $15.30
    
    
    0.57
    
    
    
    367,676
    
    
    
    10.97Stock options outstanding, end of year
    
    
    4.28
    
    
    
    8,084,990
    
    
    $
    2.97
   2010
    
    2009Risk-free interest rate
    
    2.48% - 2.49%
    
    1.78% - 2.40%Expected stock price volatility
    
    87.4% - 90.1%
    
    83.4% - 89.6%Expected life
    
    3.7 - 3.8 years
    
    3.5 yearsExpected forfeitures
    
    5.4%
    
    Expected dividend yield
    
    
    
    Fair value per share under options granted
    
    CDN$0.88 - CDN$0.90
    
    CDN$0.89 - CDN$1.36
  (in thousands)
    
    2010
    
    
    2009Operating expenses
    
    $
    595
    
    
    $
    612Mineral property exploration
    
    
    174
    
    
    
    148General and administrative
    
    
    1,062
    
    
    
    3,087$
    1,831
    
    
    $
    3,847
  19.
    
    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  (in thousands)
    
    2010
    
    
    2009Cumulative foreign currency translation gain (loss)Balance, beginning of year
    
    $
    71,898
    
    
    $
    (4,925
    )Change in foreign currency translation
    
    
    31,870
    
    
    
    76,823Balance, end of year
    
    
    103,768
    
    
    
    71,898Unrealized gains on investmentsBalance, beginning of year
    
    
    3,584
    
    
    
    216Net increase (decrease) in unrealized
gains, net of tax (1)
    
    
    (2,490
    )
    
    
    3,368Balance, end of year
    
    
    1,094
    
    
    
    3,584Accumulated other comprehensive income (loss), end of year
    
    $
    104,862
    
    
    $
    75,482
 (1)
    
    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 2010, approximately $3,333,000 of gains from asset
disposals and $181,000 of other than temporary losses were realized and reclassified to the
consolidated statements of operations within other income (expense). During 2009,
approximately
$5,532,000 of gains from asset disposals and $149,000 of other than temporary losses were
realized and reclassified to the consolidated statements of operations within other income
(expense).
  - 27 -




---



##### 



20.
    
    SUPPLEMENTAL FINANCIAL INFORMATION
  (in thousands)
    
    2010
    
    
    2009COGS  mineral concentrates
    
    $
    111,161
    
    
    $
    76,771COGS  mineral concentrates  NRV adjustments
    
    
    (21,315
    )
    
    
    (8,071
    )Mining and development
    
    
    31,381
    
    
    
    50,848Less: absorption to stockpiles, mineral properties
    
    
    (30,202
    )
    
    
    (48,200
    )Mineral property amortization and stockpile
depletion
    
    
    47,202
    
    
    
    38,738Milling and conversion
    
    
    50,190
    
    
    
    46,364Less: absorption to concentrates
    
    
    (91,399
    )
    
    
    (82,450
    )Reclamation  accretion / adjustments
    
    
    91
    
    
    
    (1,938
    )Post-employment  accretion / adjustments
    
    
    262
    
    
    
    203Selling expenses
    
    
    1,592
    
    
    
    1,357Cost of services
    
    
    14,926
    
    
    
    12,161Inventory  non-cash adjustments
    
    
    8,660
    
    
    
    12,362Operating expenses
    
    $
    122,549
    
    
    $
    98,145
  (in thousands)
    
    2010
    
    
    2009Interest income
    
    $
    680
    
    
    $
    785Interest expense
    
    
    (27
    )
    
    
    (1,438
    )Gains (losses) on:Foreign exchange
    
    
    (8,003
    )
    
    
    (17,476
    )Land, plant and equipment disposals
    
    
    (594
    )
    
    
    147Investment disposals
    
    
    3,333
    
    
    
    5,532Investment other than temporary losses
    
    
    (181
    )
    
    
    (149
    )Restricted cash and investments 
fair value change
    
    
    207
    
    
    
    (809
    )Contract settlement fee income (1)
    
    
    11,000
    
    
    
    Other
    
    
    (603
    )
    
    
    (1,143
    )Other income (expense)
    
    $
    5,812
    
    
    $
    (14,551
    )
 (1)
    
    In June 2010, the Company agreed to terminate one of its sales contracts in exchange for
a termination fee of $11,000,000 payable in two installments  $6,000,000 in June 2010 and
$5,000,000 in March 2011. The June 2010 installment has been received and the $5,000,000
March 2011 installment has been included in the Companys trade and other receivable as a
sundry receivable (see note 3).
  (in thousands)
    
    2010
    
    
    2009Net change in non-cash working capital items:Trade and other receivables
    
    $
    (5,176
    )
    
    $
    344Inventories
    
    
    (1,877
    )
    
    
    (22,229
    )Prepaid expenses and other assets
    
    
    (283
    )
    
    
    (284
    )Accounts payable and accrued liabilities
    
    
    4,004
    
    
    
    (15,071
    )Reclamation and remediation obligations
    
    
    (1,249
    )
    
    
    (1,051
    )Deferred revenue
    
    
    152
    
    
    
    274Post-employment benefits
    
    
    (266
    )
    
    
    (281
    )Net change in non-cash working capital items
    
    $
    (4,695
    )
    
    
    (38,298
    )
  - 28 -




---



##### 



21.
    
    SEGMENTED INFORMATION
 Business Segments
   Canada
    
    
    U.S.A
    
    
    Africa
    
    
    Asia
    
    
    Services(in thousands)
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    and Other
    
    
    TotalStatement of Operations:Revenues
    
    
    32,820
    
    
    
    77,432
    
    
    
    
    
    
    
    
    
    
    
    18,068
    
    
    
    128,320ExpensesOperating expenses
    
    
    37,335
    
    
    
    70,289
    
    
    
    
    
    
    
    
    
    
    
    14,925
    
    
    
    122,549Sales royalties and capital taxes
    
    
    2,251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74
    
    
    
    2,325Mineral property exploration
    
    
    5,946
    
    
    
    566
    
    
    
    44
    
    
    
    970
    
    
    
    
    
    
    
    7,526General and administrative
    
    
    
    
    
    
    4,832
    
    
    
    1,071
    
    
    
    1,035
    
    
    
    7,374
    
    
    
    14,312Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,831
    
    
    
    1,83145,532
    
    
    
    75,687
    
    
    
    1,115
    
    
    
    2,005
    
    
    
    24,204
    
    
    
    148,543Income (loss) from operations
    
    
    (12,712
    )
    
    
    1,745
    
    
    
    (1,115
    )
    
    
    (2,005
    )
    
    
    (6,136
    )
    
    
    (20,223
    )Revenues  supplemental:Uranium concentrates
    
    
    32,820
    
    
    
    55,158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    87,978Vanadium related concentrates
    
    
    
    
    
    
    16,934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,934Environmental services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,492
    
    
    
    15,492Management fees and commissions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,576
    
    
    
    2,576Alternate feed processing and other
    
    
    
    
    
    
    5,340
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,34032,820
    
    
    
    77,432
    
    
    
    
    
    
    
    
    
    
    
    18,068
    
    
    
    128,320Long-lived assets:Plant and equipmentCost
    
    
    101,781
    
    
    
    96,500
    
    
    
    973
    
    
    
    533
    
    
    
    4,112
    
    
    
    203,899Accumulated depreciation
    
    
    (5,543
    )
    
    
    (30,155
    )
    
    
    (559
    )
    
    
    (381
    )
    
    
    (2,000
    )
    
    
    (38,638
    )Mineral properties, net
    
    
    332,217
    
    
    
    80,775
    
    
    
    127,624
    
    
    
    8,581
    
    
    
    
    
    
    
    549,197Intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,794
    
    
    
    3,794Goodwill
    
    
    53,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,919482,374
    
    
    
    147,120
    
    
    
    128,038
    
    
    
    8,733
    
    
    
    5,906
    
    
    
    772,171Capital additions:Property, plant and equipment
    
    
    965
    
    
    
    26,929
    
    
    
    1,353
    
    
    
    550
    
    
    
    1,112
    
    
    
    30,909
  - 29 -




---



##### 



Canada
    
    
    U.S.A
    
    
    Africa
    
    
    Asia
    
    
    Services(in thousands)
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    Mining
    
    
    and Other
    
    
    TotalStatement of Operations:Revenues
    
    
    26,211
    
    
    
    38,211
    
    
    
    
    
    
    
    
    
    
    
    14,748
    
    
    
    79,170ExpensesOperating expenses
    
    
    32,024
    
    
    
    53,908
    
    
    
    
    
    
    
    
    
    
    
    12,213
    
    
    
    98,145Sales royalties and capital taxes
    
    
    1,688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    1,675Mineral property exploration
    
    
    7,726
    
    
    
    252
    
    
    
    2,054
    
    
    
    88
    
    
    
    
    
    
    
    10,120General and administrative
    
    
    16
    
    
    
    3,968
    
    
    
    1,384
    
    
    
    1,073
    
    
    
    7,442
    
    
    
    13,883Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,847
    
    
    
    3,847Mineral property impairment
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    100,000Intangibles impairment
    
    
    
    
    
    
    359
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359Goodwill impairment
    
    
    22,136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,13663,590
    
    
    
    58,487
    
    
    
    103,438
    
    
    
    1,161
    
    
    
    23,489
    
    
    
    250,165Loss from operations
    
    
    (37,379
    )
    
    
    (20,276
    )
    
    
    (103,438
    )
    
    
    (1,161
    )
    
    
    (8,741
    )
    
    
    (170,995
    )Revenues  supplemental:Uranium concentrates
    
    
    26,211
    
    
    
    33,678
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,889Vanadium related concentrates
    
    
    
    
    
    
    4,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,480Environmental services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,226
    
    
    
    12,226Management fees and commissions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,522
    
    
    
    2,522Alternate feed processing and other
    
    
    
    
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5326,211
    
    
    
    38,211
    
    
    
    
    
    
    
    
    
    
    
    14,748
    
    
    
    79,170Long-lived assets:Plant and equipmentCost
    
    
    98,248
    
    
    
    81,991
    
    
    
    940
    
    
    
    523
    
    
    
    2,834
    
    
    
    184,536Accumulated depreciation
    
    
    (5,481
    )
    
    
    (20,278
    )
    
    
    (372
    )
    
    
    (287
    )
    
    
    (1,497
    )
    
    
    (27,915
    )Mineral properties, net
    
    
    321,306
    
    
    
    78,765
    
    
    
    126,306
    
    
    
    8,041
    
    
    
    
    
    
    
    534,418Intangibles
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,436
    
    
    
    4,436Goodwill
    
    
    51,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,028465,101
    
    
    
    140,478
    
    
    
    126,874
    
    
    
    8,277
    
    
    
    5,773
    
    
    
    746,503Capital additions:Property, plant and equipment
    
    
    4,674
    
    
    
    34,933
    
    
    
    2,975
    
    
    
    1,410
    
    
    
    262
    
    
    
    44,254
 Revenue Concentration
  22.
    
    RELATED PARTY TRANSACTIONS
 Uranium Participation Corporation
 
  - 30 -




---



##### 



(in thousands)
    
    2010
    
    
    2009RevenueManagement fees (including expenses)
    
    $
    1,614
    
    
    $
    1,541Commission and transaction fees
    
    
    962
    
    
    
    981$
    2,576
    
    
    $
    2,522
  3 8 3 8 3 8 3 8 3 8
 Korea Electric Power Corporation (KEPCO)
 3 8
 Other
   23.
    
    JOINT VENTURE INTERESTS
   - 31 -




---



##### 



(in thousands)
    
    2010
    
    
    2009Operating expenses
    
    $
    35,160
    
    
    $
    29,922Mineral property exploration
    
    
    5,664
    
    
    
    7,616General and administrative
    
    
    145
    
    
    
    178Impairment  intangibles
    
    
    
    
    
    
    359Net other expense (income)
    
    
    655
    
    
    
    363Loss for the year before taxes
    
    
    41,624
    
    
    
    38,438Current assets
    
    
    6,135
    
    
    
    24,059Plant and equipment
    
    
    95,969
    
    
    
    92,343Mineral properties
    
    
    340,772
    
    
    
    329,323Current liabilities
    
    
    (1,600
    )
    
    
    (3,120
    )Long-term liabilities
    
    
    (2,836
    )
    
    
    (2,193
    )Net investment in joint ventures
    
    $
    438,440
    
    
    $
    440,412
 24.
    
    CAPITAL MANAGEMENT AND FINANCIAL INSTRUMENT RISK
 Capital Management
   At December 31
    
    
    At December 31(in thousands)
    
    2010
    
    
    2009Cash and cash equivalents
    
    $
    (97,554
    )
    
    $
    (19,804
    )Debt obligations  current
    
    
    200
    
    
    
    869Debt obligations  long term
    
    
    205
    
    
    
    195Net debt (cash and cash equivalents)
    
    
    (97,149
    )
    
    
    (18,740
    )Shareholders equity
    
    
    806,105
    
    
    
    728,228Total capital
    
    $
    708,956
    
    
    $
    709,488
 Fair Values of Financial Instruments
  (a) Credit Risk
   - 32 -




---



##### 



(in thousands)
    
    2010Cash and cash equivalents
    
    $
    97,554Trade and other receivables
    
    
    20,236Investments
    
    
    2,955Restricted cash and investments
    
    
    22,946$
    143,691
 (b) Liquidity Risk
   Within 1
    
    
    1 to 5(in thousands)
    
    Year
    
    
    YearsAccounts payable and accrued liabilities
    
    $
    13,753
    
    
    $
    Debt obligations (Note 13)
    
    
    200
    
    
    
    205$
    13,953
    
    
    $
    205
 (c) Currency Risk
    
    
    For each 10 percent increase in the USD$ to CDN$ foreign exchange rate (from 0.9946 at
year-end to 1.0941), the Companys net income increases by $16,654,000; and
    
    For each 10 percent increase in the USD$ to ZMK$ foreign exchange rate (from 4,928.30 at
year-end to 5,421.13), the Companys net income decreases by $3,400,000.
 (d) Interest Rate Risk
    - 33 -




---



##### 



(e) Price Risk
   Change inChange in
    
    
    Comprehensive(in thousands)
    
    Net Income (1)
    
    
    Net Income (1)Equity price risk10% increase in equity prices
    
    $
    
    
    
    $
    29610% decrease in equity prices
    
    $
    
    
    
    $
    (296
    )
 (1)
    
    In the above table, positive (negative) values represent increases (decreases) in net
income and comprehensive net income respectively.
 (f) Fair Value Estimation
  
    
    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.
    Fair(in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    ValueFinancial assets at fair value:Investments-Available for sale securities (1)
    
    $
    2,955
    
    
    $
    
    
    
    $
    
    
    
    $
    2,955Restricted investments (2)
    
    
    15,983
    
    
    
    
    
    
    
    
    
    
    
    15,983
 (1)
    
    Classification designated as available-for-sale.(2)
    
    Classification designated as held-to-trading. See note 6 for amount of restricted
investments within restricted cash and investments asset amount.
  - 34 -




---



##### 



25.
    
    COMMITMENTS AND CONTINGENCIES
 General Legal Matters
  Third Party Indemnities
  Performance Bonds and Letters of Credit
  Others
  (in thousands)2011
    
    $
    13,5512012
    
    
    3,2692013
    
    
    3,2572014
    
    
    1,7222015
    
    
    3682016 and thereafter
    
    
    
 26.
    
    SUBSEQUENT EVENTS
   27.
    
    MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
   - 35 -




---



##### 



a) Cash and Equivalents
  b) Mineral Properties and Inventory Valuation
    c) Joint Ventures
  d) Goodwill
  e) Liabilities relating to flow-through shares
  f) Dilution Gains
   - 36 -




---



##### 



December 31, 2010Canadian
    
    
    
    
    
    
    
    
    U.S.GAAP
    
    
    
    
    Adjustments
    
    
    GAAPCash and cash equivalents
    
    $
    97,554
    
    
    (a)
    
    $
    (4,106
    )
    
    $
    93,448Inventories
    
    
    32,387
    
    
    (b)
    
    
    (3,691
    )
    
    
    28,696Restricted cash and investments
    
    
    22,946
    
    
    (a)
    
    
    4,106
    
    
    
    27,052Property, plant and equipment
    
    
    714,458
    
    
    (b)
    
    
    (91,102
    )
    
    
    623,356Accounts payable and accrued liabilities
    
    
    13,753
    
    
    (e)
    
    
    
    
    
    
    13,753Future income tax liability
    
    
    106,183
    
    
    (b)
    
    
    3,079
    
    
    
    109,262Share capital
    
    
    910,484
    
    
    (d)
    
    
    (616
    )(e)
    
    
    1,198
    
    
    
    911,066Additional paid-in capital
    
    
    
    
    
    (f)
    
    
    9,814
    
    
    
    9,814Deficit
    
    
    (256,729
    )
    
    (b)
    
    
    (93,995
    )(b)
    
    
    (3,079
    )(d)
    
    
    616(e)
    
    
    (855
    )(f)
    
    
    (9,814
    )
    
    
    (363,856
    )Accumulated other comprehensive income
    
    
    104,862
    
    
    (b)
    
    
    (798
    )(e)
    
    
    (343
    )
    
    
    103,721
 December 31, 2009Canadian
    
    
    
    
    
    
    
    
    U.S.GAAP
    
    
    
    
    Adjustments
    
    
    GAAPCash and cash equivalents
    
    $
    19,804
    
    
    (a)
    
    $
    (1,177
    )
    
    $
    18,627Inventories
    
    
    52,216
    
    
    (b)
    
    
    (3
    )
    
    
    52,213Restricted cash and investments
    
    
    21,656
    
    
    (a)
    
    
    1,177
    
    
    
    22,833Property, plant and equipment
    
    
    691,039
    
    
    (b)
    
    
    (86,377
    )
    
    
    604,662Accounts payable and accrued liabilities
    
    
    9,508
    
    
    (e)
    
    
    39
    
    
    
    9,547Future income tax liability
    
    
    102,918
    
    
    (b)
    
    
    3,328
    
    
    
    106,246Share capital
    
    
    849,488
    
    
    (d)
    
    
    (616
    )(e)
    
    
    (39
    )
    
    
    848,833Additional paid-in capital
    
    
    
    
    
    (f)
    
    
    9,814
    
    
    
    9,814Deficit
    
    
    (242,494
    )
    
    (b)
    
    
    (86,019
    )(b)
    
    
    (3,328
    )(d)
    
    
    616(f)
    
    
    (9,814
    )
    
    
    (341,039
    )Accumulated other comprehensive loss
    
    
    75,482
    
    
    (b)
    
    
    (362
    )
    
    
    75,120
  - 37 -




---



##### 



2010
    
    
    2009Net loss for the year, Canadian GAAP
    
    
    
    $
    (14,235
    )
    
    $
    (147,012
    )Adjustments to U.S. GAAP:Mineral property capitalized amounts
    
    (b)
    
    
    (4,288
    )
    
    
    (40,896
    )Mineral property impairment amounts
    
    (b)
    
    
    
    
    
    
    17,717Inventory valuation
    
    (b)
    
    
    (3,688
    )
    
    
    906Tax effect of above adjustments
    
    (b)
    
    
    249
    
    
    
    (4,701
    )Flow-through share renunciation adjustment
    
    (e)
    
    
    (855
    )
    
    
    Net loss for the year, U.S. GAAP
    
    
    
    $
    (22,817
    )
    
    $
    (173,986
    )Deficit, beginning of year, U.S. GAAP
    
    
    
    $
    (341,039
    )
    
    $
    (167,053
    )Deficit, end of year, U.S. GAAP
    
    
    
    $
    (363,856
    )
    
    $
    (341,039
    )Comprehensive income (loss), U.S. GAAPNet loss for the year, U.S. GAAP
    
    
    
    $
    (22,817
    )
    
    $
    (173,986
    )Unrealized gain (loss) on available-for-sale securities
    
    
    
    
    (2,490
    )
    
    
    3,368Cumulative foreign currency translation gain
    
    
    
    
    31,090
    
    
    
    75,894Comprehensive income (loss), U.S. GAAP
    
    
    
    
    5,783
    
    
    
    (94,724
    )Basic net loss per share, U.S. GAAP
    
    
    
    $
    (0.07
    )
    
    $
    (0.61
    )Diluted net loss per share, U.S. GAAP
    
    
    
    $
    (0.07
    )
    
    $
    (0.61
    )
  2010
    
    
    2009Net cash provided by (used in) operating activities:Under Canadian GAAP
    
    
    
    $
    35,551
    
    
    $
    (42,442
    )Adjustment for capitalized mineral property amounts
    
    (b)
    
    
    (14,305
    )
    
    
    (25,104
    )Under U.S. GAAP
    
    
    
    $
    21,246
    
    
    $
    (67,546
    )Net cash used in investing activities:Under Canadian GAAP
    
    
    
    $
    (19,472
    )
    
    $
    (27,116
    )Adjustment for capitalized mineral property amounts
    
    (b)
    
    
    14,305
    
    
    
    25,104Under U.S. GAAP
    
    
    
    $
    (5,167
    )
    
    $
    (2,012
    )Net cash provided by financing activities:Under Canadian GAAP
    
    
    
    $
    60,595
    
    
    $
    85,414Restricted cash from flow-through financings
    
    (a)
    
    
    (4,106
    )
    
    
    (1,177
    )Under U.S. GAAP
    
    
    
    $
    56,489
    
    
    $
    84,237
  - 38 -




---



##### 



Accounting Changes:
  a)
    
    Amendments to Accounting for VIEs  In 2009, the FASB issued an amendment to its
guidance on Variable Interest Entities (VIE). Although not effective until first quarter
2010, this new guidance makes significant changes to the model for determining who should
consolidate a VIE by specifically eliminating the quantitative approach to determining the
primary beneficiary. The amendment requires the use of a qualitative approach to determine
the primary beneficiary, based on the power to direct activities of the VIE that most
significantly impact its economic performance and an obligation to absorb losses or to
receive
benefits of the VIE. If the power is shared, then no party is the primary beneficiary.
This amendment did not have an impact on the Companys financial statements.
    - 39 -