Exhibit
99.1








Denison Mines
Corp.





2017 Annual Information Form


March 27,
2018












































ABOUT THIS ANNUAL INFORMATION FORM
 
 This annual
information form (“AIF”) is dated March 27, 2018.
Unless stated otherwise, all of the information in this AIF is
stated as at December 31, 2017.
 
 This AIF has been
prepared in accordance with Canadian securities laws and contains
information regarding Denison’s history, business, mineral
reserves and resources, the regulatory environment in which Denison
does business, the risks that Denison faces and other important
information for Shareholders.
 
 This AIF
incorporates by reference:
 
 ●
 Denison’s management
discussion and analysis (“MD&A”) for the year ended
December 31, 2017, which is available under the Company’s
profile on SEDAR (www.sedar.com) and on EDGAR
(www.sec.gov/edgar.shtml)
as an exhibit to the Company’s Form 40-F.
 
 ●
 Denison’s audited
consolidated financial statements for the year ended December 31,
2017, which are available on SEDAR and EDGAR as an exhibit to the
Company’s Form 40-F.
 
 Financial Information
 
 Unless otherwise
specified, all dollar amounts referred to in this AIF are stated in
Canadian dollars. References to “USD” mean United
States dollars.
 
 Financial
information is derived from consolidated financial statements that
have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting
Standards Board.
 
 Table of
ContentsAbout this AIF
1About Denison
4Developments over the Last Three
Years
6The Uranium Industry
14Mineral Resources and
Reserves
19Mineral Properties
23Athabasca Exploration: Sampling,
Analysis and Data Verification
69Denison Operations
74Manager of UPC
78Denison Environmental
Services
78Environmental, Health and Safety
Matters
78Government Regulation
80Risk Factors
84Denison’s
Securities
95Denison’s
Management
97Legal and Regulatory
Proceedings
102Material Contracts
103Names and Interests of
Experts
104Additional Information
106Audit Committee Mandate
AGlossary of Terms
B





Caution about Forward-Looking Information





Certain
information contained in this AIF and
the documents incorporated by reference concerning the business,
operations and financial performance and condition of Denison
constitutes forward-looking information within the meaning of the
United States Private Securities Litigation
Reform Act of 1995 and similar
Canadian legislation.





Generally,
the use of words and phrases like "plans", "expects", "is
expected", "budget", "scheduled", "estimates", “forecasts",
"intends", "anticipates", or "believes", or the negatives and/or
variations of such words and phrases, or statements that certain
actions, events or results "may", "could", "would", "might" or
"will" "be taken", "occur", "be achieved" or “has the
potential to” and similar expressions are intended to
identify forward-looking information.





Forward-looking
information involves known and unknown risks, uncertainties,
material assumptions and other factors that may cause actual
results or events to differ materially from those expressed or
implied by such forward-looking statements.





2017
Annual Information
Form         
1





Denison
believes that the expectations and assumptions reflected in this
forward-looking information are reasonable, but no assurance can be
given that these expectations will prove to be
correct.





Forward-looking
information should not be unduly relied upon. This information
speaks only as of the date of this AIF, and Denison will not
necessarily update this information, unless required to do so by
securities laws.





Examples of Forward-Looking Information





This
AIF contains forward-looking information in a number of places,
including statements pertaining to Denison’s:





●
 expectations about 2018 and future market prices, production
costs and global uranium supply and demand
 ●
 exploration, evaluation and development
plans and
objectives
 ●
 capital expenditure programs,
exploration and development expenditures and reclamation costs and
timing
 ●
 estimates of its mineral reserves and mineral
resources
 ●
 results of its PEA and plans with respect
to the PFS (each as defined
below)
 ●
 expectations regarding
additions to its mineral reserves and resources through
acquisitions and exploration
 ●
 expectations
regarding raising capital
 ●
 expectations
regarding ongoing joint arrangements and Denison's share of the
same
 ●
 expectations regarding the
toll milling of
Cigar Lake
ores, and the relationships with its
contractual partners with respect thereto
 ●
 future
royalty and tax payments and rates
 ●
 the receipt of regulatory approvals,
permits and licences under
governmental regulatory regimes
 ●
 expectations regarding possible impacts of
litigation and regulatory
actions





Statements
relating to "mineral resources" are deemed to be forward-looking
information, as they involve the implied assessment, based on
certain estimates and assumptions that the mineral resources
described can be profitably produced in the future.





Material
Risks





Denison's actual results could differ materially
from those anticipated. Management has identified the following
risk factors which could have a material impact on the Company or
the trading price of its common shares (“Shares”):





●
 the speculative nature of exploration and
development projects
 ●
 the risk of failure to realize benefits
from transactions
 ●
 the imprecision of mineral
reserve and resource estimates
 ●
 the risk of Denison’s
inability to expand and replace its mineral reserves and
resources
 ●
 the impact of uranium price
volatility on the valuation of Denison’s mineral reserves and
resources and the market price of its
shares
 ●
 uncertainty
regarding public acceptance of nuclear energy and competition from
other energy sources
 ●
 volatility in
the market price of the Company’s shares
 ●
 the risk of
dilution from future equity financings
 ●
 reliance on
other operators
 ●
 risk of
challenges to property title and/or contractual interests in
Denison’s properties
 ●
 competition
for properties
 ●
 global
financial conditions
 ●
 the risk of failure by Denison to meet its
obligations to its creditors
 ●
 change of control
restrictions
 ●
 the capital intensive nature
of mining industry and the uncertainty of funding
 ●
 uncertainty as to reclamation
and decommissioning liabilities and timing
 ●
 potential for technical
innovation rendering Denison’s products and services
obsolete





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      2





●
 liabilities inherent in
mining operations and the adequacy of insurance
coverage
 ●
 delays in obtaining licence
amendments and renewals for development properties
 ●
 difficulty complying with
changing government regulations and policy, including without
limitation, compliance with environment, health and safety
regulations
 ●
 potential claims of Canada’s First
Nations people
 ●
 the ability
of Denison to ensure compliance with anti-bribery and
anti-corruption laws
 ●
 the
uncertainty regarding risks posed by climate change
 ●
 global demand
and international trade restrictions
 ●
 the reliance
of the Company on its information systems and the risk of
cyber-attacks on those systems
 ●
 dependence on
key personnel
 ●
 dependence on
contractors and third parties
 ●
 potential
conflicts of interest for the Company’s directors who are
engaged in similar businesses
 ●
 limitations
of disclosure and internal controls
 ●
 the potential influence of
Denison’s largest Shareholder, Korea Electric Power
Corporation (“KEPCO”) and its subsidiary, Korea Hydro
& Nuclear Power
(“KHNP”).








The
risk factors listed above are discussed in more detail later in
this AIF (see “Risk Factors”). The risk factors
discussed in this AIF are not, and should not be construed as
being, exhaustive.





Material assumptions





The
forward looking statements in this AIF and the documents
incorporated by reference are based on material assumptions,
including the following, which may prove to be
incorrect:





●
 our expectations regarding the demand for, and supply of, uranium,
the outlook for long-term contracting, changes in regulations,
public perception of nuclear power, and the construction of new and
relicensing of existing nuclear power plants


●
 our budget,
including expected exploration levels and costs and the assumptions
regarding market conditions and other factors upon which we have
based our expenditure expectations


●
 our
expectations regarding spot prices and realized prices for
uranium


●
 our
expectations regarding tax rates, currency exchange rates and
interest rates


●
 our
decommissioning and reclamation obligations and the status and
ongoing maintenance of agreements with third parties with respect
thereto


●
 our mineral
reserve and resource estimates, and the assumptions upon which they
are based


●
 our, and our
contractors’, ability to comply with current and future
environmental, safety and other regulatory requirements and to
obtain and maintain required regulatory approvals


●
 our
operations are not significantly disrupted as a result of political
instability, nationalization, terrorism, sabotage, social or
political activism, breakdown, natural disasters, governmental or
political actions, litigation or arbitration proceedings, equipment
or infrastructure failure, labour shortages, transportation
disruptions or accidents, or other development or exploration
risks





A Note for US Investors Regarding Estimates of Measured, Indicated
and Inferred Mineral Resources





This AIF uses the terms “measured”,
“indicated” and “inferred” mineral
resources. United States investors are advised that while such
terms are recognized and required by Canadian regulations, the
United States Securities and Exchange Commission does not recognize
them. “Inferred mineral resources” have a great amount
of uncertainty as to their existence, and as to their economic and
legal feasibility. It cannot be assumed that all or any part of an
inferred mineral resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or other economic
studies. United States investors
are cautioned not to assume that all or any part of measured or
indicated mineral resources will ever be converted into mineral
reserves. United States investors are also cautioned not to assume
that all or any part of an inferred mineral resource exists, or is
economically or legally mineable.








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Annual Information
Form         
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ABOUT DENISON





Denison Mines
Corp. is engaged in uranium exploration and development. The
registered and head office of Denison is located at 1100 – 40
University Avenue, Toronto, Ontario, M5J 1T1, Canada.
Denison’s website address is www.denisonmines.com.





At the
end of 2017, Denison had a total of 68 active employees, all of
which were employed in Canada. None of the Company’s
employees are unionized.

The Shares are listed on the
Toronto Stock Exchange (“TSX”) under the symbol
“DML” and on the NYSE American (formerly NYSE MKT)
under the symbol “DNN.” Computershare Investor Services
Inc. acts as the registrar and transfer agent for the Shares. The
address for Computershare Investor Services Inc. is 100 University
Avenue, 8th Floor, Toronto, ON, M5J 2Y1, Canada, and the telephone
number is 1-800-564-6253.
In this AIF, Denison or the Company
means Denison Mines Corp.,
Shareholders means holders
of
Denison’s common shares
and
Shares
means Denison’s common shares.







Denison is a
reporting issuer in all of the Canadian provinces. The Shares are
also registered under the United States Securities Exchange Act of 1934, as
amended, and Denison files periodic reports with the United States
Securities and Exchange Commission.





Denison’s Structure





Denison conducts
its business through a number of subsidiaries. The following is a
diagram depicting the corporate structure of Denison and its active
subsidiaries as at December 31, 2017, including the name,
jurisdiction of incorporation and proportion of ownership interest
in each.















Denison also owns
a number of inactive subsidiaries which have no liabilities or
assets and do not engage in any business activities.








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Annual Information
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Denison Asset Overview





Uranium Exploration and Development





Denison’s
uranium exploration properties are principally held directly by the
Company or indirectly through Denison Mines Inc.
(“DMI”), Denison
Waterbury Corp. and Denison AB Holdings Corp.





Denison’s Key Assets - In the Athabasca Basin in Northern
Saskatchewan:

●
A 63.30% interest in, and
operator of, the Wheeler River project, which is host to the
Phoenix and Gryphon uranium deposits – together representing
the largest undeveloped uranium project in the infrastructure rich
eastern Athabasca Basin.

●
A 64.22% interest in, and
operator of, the Waterbury Lake project, which includes the J Zone
deposit and Huskie discovery.

●
A 22.50% interest in the
McClean Lake uranium processing facility and uranium deposits,
through its interest in the McClean Lake Joint Venture
(“MLJV”)
operated by Orano Canada Inc. (formerly AREVA Resources Canada
Inc.) (“Orano
Canada”).

●
A 25.17% interest
in the Midwest uranium project, operated by Orano Canada, which is
host to the Midwest Main and Midwest A deposits.

●
An extensive
portfolio of exploration and development property interests,
including: Murphy Lake (82.58%); Crawford Lake (100%), Hook-Carter
(80%); South Dufferin (100%); and Mann Lake
(30%).





Toll Milling





Denison
participates in a toll-milling arrangement through its 22.50%
interest in the MLJV, whereby ore is processed for the Cigar Lake
Joint Venture (“CLJV”) at the McClean Lake
processing facility (the “Cigar Toll Milling”). In February
2017, Denison completed a financing (the “APG Transaction”) with Anglo
Pacific Group PLC ("APG")
and its wholly owned subsidiary Centaurus Royalties Ltd. for gross
proceeds to Denison of $43,500,000. The APG Transaction has the
effect of monetizing a portion of Denison’s future share of
the Cigar Toll Milling, with the benefit of providing Denison with
the financial flexibility to advance its interests in the Athabasca
Basin, including the Wheeler River project. While the APG
Transaction monetized certain future toll milling receipts from the
Cigar Toll Milling, Denison retains a 22.5% strategic ownership
stake in the MLJV and McClean Lake processing facility. See
“Denison’s Operations – Cigar Lake Toll Milling
– APG Transaction”.





Services





The Company also
generates cash flow through the following areas of its
business:





(i)
 Management of Uranium
Participation Corporation (“UPC”)





Pursuant to a
management services agreement, DMI serves as the manager of UPC, a
publicly-traded company listed on the TSX under the
symbol “U”, which invests in uranium oxide in
concentrates (U3O8) and uranium
hexafluoride (UF6).





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(ii)
 The Denison Environmental
Services (“DES”)
division of DMI





DES provides mine
care & maintenance, decommissioning, environmental and other
consulting services to third party customers.





The Formation of Denison





Denison was
formed by articles of amalgamation as International Uranium
Corporation (“IUC”), effective May 9, 1997
pursuant to the Business
Corporations Act (Ontario) (the “OBCA”). On December 1, 2006, IUC
combined its business and operations with DMI, by way of
arrangement under the OBCA (the “IUC Arrangement”). Pursuant to the
IUC Arrangement, all of the issued and outstanding shares of DMI
were acquired in exchange for IUC’s shares. Effective
December 1, 2006, IUC’s articles were amended to change its
name to “Denison Mines Corp.”





Through its acquisitions of JNR Resources Inc.
(“JNR”), Fission Energy Corp.
(“Fission”) and Rockgate Capital Corp.
(“Rockgate”) in 2013 and its acquisition of
International Enexco Limited (“IEC”) in 2014, Denison increased its project
portfolio in Canada, primarily in the Athabasca Basin. Since then,
Denison has worked to further achieve its objective of focusing on
its core activities in the Athabasca Basin, completing the sale of
its interest in the Gurvan Saihan joint venture in Mongolia to
Uranium Industry a.s. (“UI”) in 2015 and completing a transaction with
GoviEx Uranium Inc. (“GoviEx”) in 2016 to combine their respective
African uranium mineral interests, with GoviEx acquiring
Denison’s uranium mineral interests in Zambia, Mali and
Namibia.





DEVELOPMENTS OVER THE LAST THREE YEARS





2015...





In January, David
Cates, formerly Vice President Finance & Tax and Chief
Financial Officer, was appointed President and Chief Financial
Officer of the Company. Also in January, Mr. Tae Hwan Kim,
KEPCO’s representative on Denison’s Board, resigned and
was replaced by Mr. Joo Soo Park.





At the end of
January, the Company amended the terms of its credit facility with
the Bank of Nova Scotia (the “Credit Facility”). Key amendments
included the extension of the Credit Facility to January 2016, an
increase in the maximum credit provided under the facility to
$24,000,000 and the introduction of a
covenant to maintain a minimum balance of cash and equivalents of
$5,000,000 on deposit with the Bank of Nova
Scotia.





In March, Ron
Hochstein resigned as Chief Executive Officer of the Company and
was appointed Executive Chairman of the Company’s Board of
Directors and David Cates assumed the role of Chief Executive
Officer to become President and Chief Executive Officer of the
Company. To facilitate these changes, Lukas Lundin resigned as
Chairman, but continued as a Director of the Company. Also in
March, Gabriel (Mac) McDonald was appointed Vice-President Finance
and Chief Financial Officer.





In April, the
Company completed its winter exploration drilling in the Athabasca
Basin. The drilling program included the expansion of the Gryphon
zone of basement hosted uranium mineralization at Wheeler River, a
new discovery of high grade unconformity hosted uranium
mineralization southwest of Gryphon, and the extension of a zone of
high grade unconformity hosted uranium mineralization at Mann Lake.
The Company reported that over 30,300 metres had been completed in
61 drill holes on seven projects operated by the Company.
Additionally, approximately 12,700 metres were completed in 32
holes on projects operated by the Company’s joint venture
partners.





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Annual Information
Form         
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In May, the
Company completed a bought deal private placement of 12,000,000
Shares on a flow-through basis pursuant to the Income Tax Act (Canada) at a price of
$1.25 per Share for total gross proceeds of $15,000,000 (the
"2015 Offering"). The gross
proceeds from the financing were used to fund the Company's
Canadian exploration expenses through to the end of
2016.





In July, Denison
and Fission Uranium Corp. (“Fission Uranium”) announced a
transaction to create a diversified uranium company, and executed a
definitive arrangement agreement (the "2015 Fission Arrangement Agreement"). In
October, Denison and Fission Uranium terminated the arrangement
agreement because the required two-thirds approval of the
arrangement by Fission Uranium shareholders was not
obtained.





In late July,
Denison completed the definition drilling component of the summer
exploration program at the Gryphon Zone on the Wheeler River
property, and reported the discovery of uranium mineralization at
the Murphy Lake property, which is located 30 kilometres northwest
of the McClean Lake mill.





Also in late
July, the Company announced it had entered into an agreement with
UI pursuant to which the Company would sell its interest in the
Gurvan Saihan joint venture (the “GSJV”) to UI (the
“Mongolia
Transaction”). On November 25, 2015, the parties
amended and restated the Share Purchase Agreement (the
“GSJV Purchase
Agreement”) and announced the closing of the sale of
its interest in the GSJV on December 1, 2015. In connection with
the closing the Company received USD$1,250,000 and retained rights
to receive additional proceeds from contingent payments of up to
USD$12,000,000, for total consideration of up to USD$13,250,000.
The contingent payments are payable as follows: (1) USD$5,000,000
within 60 days of the issuance of a mining licence for an area
covered by any of the four principal exploration licences held by
the GSJV, being the Hairhan, Haraat, Gurvan Saihan and Ulzit
projects (the "First
Project"); (2) USD$5,000,000 within 60 days of the issuance
of a mining licence for an area covered by any of the other
exploration licences held by the GSJV (the "Second Project"); (3) USD$1,000,000
within 365 days following the production of an aggregate of 1,000
pounds U3O8 from the
operation of the First Project; and (4) USD$1,000,000 within 365
days following the production of an aggregate of 1,000 pounds
U3O8 from the
operation of the Second Project. On December 2, 2015, UI submitted
applications to the Mongolian government for mining licences for
each of the four exploration licence projects. See
“Developments Over the Last Three Years –
2016...” for further developments.





In October,
Denison appointed Lukas Lundin Executive Chairman of the Board of
Directors. To facilitate this appointment, Ron Hochstein stepped
down as Executive Chairman, but continued to serve as a
Director.





Also in October,
Denison completed its summer 2015 exploration activities. The
exploration program was highlighted by the completion of
delineation drilling at the Gryphon zone on the Wheeler River
property, which resulted in the expansion of uranium mineralization
at Gryphon. During the summer exploration program, over 37,900
metres of drilling was completed on 13 properties operated by
Denison and its partners, with approximately 24,500 metres of
drilling completed at Wheeler alone.





Effective
November, Catherine Stefan was appointed independent Lead Director
of the Board of Directors. Also in November, John Craig resigned as
a member of the Board of Directors and Steve Blower resigned from
his position as Vice President, Exploration.





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Annual Information
Form         
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Also in November,
Denison announced a significant increase in the estimated mineral
resources on its Wheeler River property due to the addition of the
Gryphon Deposit. The initial resource estimate for the Gryphon
Deposit added inferred mineral resources of 43,000,000 pounds
U3O8 (834,000 tonnes
at a grade of 2.31% U3O8) from the A, B
and C Series of mineralized lenses. This initial estimate added to
a property that was already host to the Phoenix deposit, which
includes an estimated indicated mineral resource of 70,200,000
pounds U3O8, (166,400 tonnes
at a grade of 19.14% U3O8). Together, the
Gryphon and Phoenix deposits represent a unique combination of
large resource size and high grades, with the potential for
co-development. A technical report with respect to this updated
mineral resource estimate for the Wheeler River property was
publicly filed on December 7, 2015.





Effective
December, Sheila Colman, General Counsel and Corporate Secretary,
resigned as an officer of Denison and its applicable
affiliates.





Production from
the McClean Lake mill in 2015 amounted to approximately 11,294,000
pounds U3O8 for the CLJV and
11,000 pounds U3O8 for the MLJV. The
Company’s share of toll milling revenues from processing
Cigar Lake ore at the McClean Lake mill during the year totaled
approximately USD$3,155,000.





2016...





In January, Dale
Verran was appointed Vice President, Exploration with
responsibility for overseeing and advancing the Company’s
exploration programs. Prior to his appointment, Mr. Verran served
as Technical Director, Exploration for the Company. In addition,
Mr. Joo Soo Park, KEPCO’s representative on Denison’s
Board, resigned and was replaced by Mr. Hyung Mun Bae.





Also in January,
the Company amended and extended its Credit Facility to January 31,
2017.





In February,
Amanda Willett was appointed Corporate Counsel and Corporate
Secretary of Denison on a secondment basis, which appointment was
made permanent effective June 2016.





In March, the
Company announced the execution of a new three year agreement (the
“MSA”) to
provide management services to UPC. The MSA took effect on April 1,
2016, at the conclusion of the three year term of the then current
management services agreement between UPC and DMI. See
“Manager of UPC”.





In April, Denison
announced the results of the preliminary economic assessment
(“PEA”) on its
60% (now 63.3%, as at December 31, 2017) owned Wheeler River
Project. The PEA considered the potential economic merit of
co-developing the high grade Gryphon and Phoenix deposits as a
single underground mining operation, and assumed processing at
Denison's 22.5% owned McClean Lake mill. The PEA considered two
economic scenarios: (a) a base case scenario based on a March 2016
long-term price of uranium of USD$44.00 per pound; and (b) a
production case scenario based on a long-term price of uranium of
USD$62.60 per pound. Economic highlights of the PEA included (a)
base case: a pre-tax IRR of 20.4% and a pre-tax Net Present Value
("NPV") of $513 million
(Denison's share $308 million); and (b) production case: a pre-tax
IRR of 34.1% and pre-tax NPV of $1,420 million (Denison's share
$852 million). The PEA is based on the mineral resource estimates
for the Gryphon deposit effective September 25, 2015 and the
Phoenix deposit effective May 28, 2014. Following the completion of
the PEA, a decision was made to advance towards the completion of a
Pre-Feasibility Study (“PFS”) which would require
additional definition drilling to be completed in order to improve
the confidence in the existing mineral resources estimated for the
Gryphon deposit. See “Mineral Properties – Wheeler
River”.





2017
Annual Information
Form         
8





Also in April,
Denison completed its winter exploration drilling in the Athabasca
Basin. Drilling results at Wheeler River included the discovery of
the D Series of mineralized lenses, located within 200 metres north
and northwest of the Gryphon deposit and continued intercepts of
mineralization and/or radioactivity to the southwest of Gryphon
along the K-North trend. Other notable winter results included the
extension of a mineralized trend at Murphy Lake and the discovery
of mineralization on the CR-3 trend at Moon Lake South. The Company
reported that 31,091 metres of drilling had been completed in 55
drill holes on seven projects operated by the Company.
Additionally, 8,107 metres of drilling was completed in 31 holes on
projects operated by the Company’s joint venture
partners.





In May, Denison completed a private placement
offering (the "2016
Offering") of Shares issued on
a "flow-through" basis pursuant to the Income Tax Act
(Canada). Denison issued 15,127,805
Shares, at a price of $0.82 per Share, for aggregate gross proceeds
to Denison of $12,405,000. The gross proceeds from the financing
were intended to fund the Company’s Canadian exploration
expenses through to the end of 2017.





In June, GoviEx and Denison completed the
combination of their respective African uranium mineral interests
(the “Africa
Transaction”). Pursuant
to the Africa Transaction, GoviEx acquired all of Denison’s
African uranium mineral interests in Mali, Zambia and Namibia
through the acquisition of Rockgate from Denison. In exchange,
Denison received 56,050,450 common shares and 22,420,180 common
share purchase warrants (“Consideration
Warrants”) of GoviEx.
Each Consideration Warrant is convertible into one common share of
GoviEx at a price of USD$0.15 per share for a period of three
years. The Consideration Warrants include an acceleration clause,
which provide that in the event that the closing price of
GoviEx’s common shares on the TSX Venture Exchange is equal
to or greater than $0.24 per share for a period of 15 consecutive
trading days, GoviEx may provide holders of the Consideration
Warrants with written notice that holders have 30 days to exercise
the Consideration Warrants on the original terms, failing which the
exercise price of the Consideration Warrants will be increased to
USD$0.18 per share and the term of the Consideration Warrants will
be reduced by six months. Concurrently, GoviEx completed a
non-brokered equity financing on a private placement basis, in
which Denison provided the lead order of approximately USD$500,000
for 9,093,571 common shares and common share purchase warrants (the
“Concurrent
Warrants”). Each
Concurrent Warrant is convertible into one common share of GoviEx
for a period of three years, at a price of USD$0.12 per share until
June 10, 2018 and thereafter at a price of USD$0.14 per share. The
Concurrent Warrants include an acceleration clause, which provide
that in the event that the closing price of GoviEx’s common
shares on the TSX Venture Exchange is equal to or greater than
$0.20 per share for a period of 15 consecutive trading days, GoviEx
may provide holders of the Concurrent Warrants with written notice
that holders have 60 days to exercise the Concurrent Warrants on
the original terms, failing which the Concurrent Warrants will
expire unexercised. In total, as a result of the sale and the
concurrent financing, Denison acquired a total of 65,144,021 common
shares of GoviEx, or approximately 24.6% of GoviEx’s issued
and outstanding common shares at the end of June 2016 (18.72% at
December 2017, according to publicly available information as at
the date of this AIF), and 31,513,751 GoviEx common share purchase
warrants. GoviEx is a publicly traded company and is listed on the
TSX Venture Exchange under the symbol “GXU”. For so
long as Denison holds at least 5% of the issued and outstanding
common shares of GoviEx, Denison will have the right to appoint one
director to the GoviEx board of directors and will have the right
to participate in future GoviEx equity financings in order to
maintain its pro-rata ownership. Denison’s nominee director,
Mr. David Cates, President and Chief Executive Officer of Denison,
was appointed to the GoviEx board of directors.





2017
Annual Information
Form         
9





In August, the
Company closed an option agreement with Skyharbour Resources Ltd.
(“Skyharbour”),
which grants Skyharbour an option to acquire a 100% interest in
Denison’s wholly owned Moore Lake property in exchange for
cash, stock and exploration spending commitments (the
“Skyharbour
Agreement”). Under the terms of the Skyharbour
Agreement, Denison received 4,500,000 common shares of Skyharbour
and will receive staged cash payments of $500,000, in aggregate,
over the next five years. Skyharbour must also spend $3,500,000 in
exploration expenditures on the property over the same five year
period in order to complete the option. Under the terms of the
Skyharbour Agreement, Denison also maintains various back-in rights
on the property to re-acquire a 51% interest in the property and is
entitled to nominate a member to Skyharbour’s Board of
Directors as long as Denison maintains a minimum ownership position
of 5%. In total, as a result of the option agreement shares and
Denison's existing position, Denison held 5,000,000 common shares
of Skyharbour, or approximately 11.3% of Skyharbour's issued and
outstanding shares at the end of August 2016 (approximately 10.0%
at December 2017, based on publicly available information as at the
date of this AIF and taking into account additional shares acquired
by Denison subsequent to the Skyharbour Agreement date). Denison's
nominee director, Mr. David Cates, was appointed to the Skyharbour
board of directors.





In September, the
Mongolian government (through the Mineral Resource Authority of
Mongolia) formally issued the mining licence certificates for the
Hairhan, Haraat, Gurvan Saihan and Ulzit projects. The issuances
triggered an obligation for UI to make an aggregate of
USD$10,000,000 of contingent payments to Denison, within 60 days,
as per the terms of the Mongolia Transaction. See
“Developments Over the Last Three Years –
2017...” for further information.





In October,
Denison announced completion of a highly successful summer 2016
drilling program on the Wheeler River project. Highlights included;
(1) continued expansion of the D Series lenses along strike to a
collective strike length of 330 metres, (2) new high grade drill
intersections which indicated expansion of the A and B Series
lenses both down-dip and up-dip on the southwestern portion of the
Gryphon deposit, (3) discovery of basement-hosted mineralization on
the K-West conductive trend, located approximately 500 metres west
of the Gryphon deposit, and (4) completion of an initial set of
five infill and delineation holes on the Gryphon deposit, which
confirmed high grades. During the summer exploration program, over
32,000 metres of drilling was completed on five properties operated
by Denison, with over 25,000 metres of drilling completed at
Wheeler River. A further 4,857 metres of drilling was completed in
10 holes on projects operated by the Company’s joint venture
partners.





In November,
Denison completed a definitive agreement with ALX Uranium Corp.
("ALX") and acquired an
immediate 80% ownership of the entire Hook-Carter property in
exchange for the issuance of 7,500,000 common shares of Denison.
Under the terms of the agreement with ALX (the “Hook-Carter Agreement”), ALX will
retain a 20% interest in the Hook-Carter property and Denison
agrees to fund ALX's share of the first $12,000,000 in
expenditures. Denison will be the operator of the project and will
retain full discretion as to the nature, extent, timing and scope
of all work projects, and has agreed to a modest work commitment,
whereby Denison is required to spend $3,000,000 on the property
over the first 3 years. If Denison does not meet the $3,000,000
work commitment, ALX's interest will increase from 20% to 25% and
Denison's interest in the project will decrease from 80% to 75%.
The parties have agreed to form a joint venture thirty-six months
after the effective date of the Hook-Carter Agreement, in which all
material decisions shall be carried by a vote representing a 51%
ownership interest.





2017
Annual Information
Form         
10





Also in November,
Denison acquired the Coppin Lake property ("Coppin Lake") from Orano Canada and UEX
Corporation. Coppin Lake comprises ten mineral claims covering an
area of 2,768 hectares in the western portion of the Athabasca
Basin region in northern Saskatchewan, contiguous with the
Hook-Carter property. Pursuant to the area of interest provisions
within the Hook-Carter Agreement, Coppin Lake now forms a part of
the Hook-Carter property for the purposes of the Hook-Carter
Agreement and the eventual joint venture between Denison and ALX
with respect thereto.





In December,
Denison was notified that the significant majority of KEPCO’s
indirect ownership of Denison’s shares had been transferred
to KHNP Canada Energy Ltd., a subsidiary of KHNP
(“KHNP Canada”).
Effective in December, Hyung Mun Bae resigned as a member of the
Board of Directors.





2017...





In January,
Denison executed an agreement with the partners of the Wheeler
River Joint Venture ("WRJV")
that is expected to increase Denison's ownership of the Wheeler
River project to up to approximately 66% by the end of 2018. The
WRJV is a joint venture between Denison as operator (now 63.3%
interest), Cameco Corporation ("Cameco") (26.7% interest), and JCU
(Canada) Exploration Limited ("JCU") (10.00% interest) (collectively,
the "JV Parties"). Under the
terms of the agreement, the JV Parties have agreed to allow for a
one-time election by Cameco to fund 50% of its ordinary share (30%)
of joint venture expenses in 2017 and 2018. The shortfall in
Cameco's contribution will be funded by Denison, in exchange for a
transfer to Denison of a portion of Cameco's interest in the WRJV.
Accordingly, Denison's share of joint venture expenses is 75% in
2017 and 2018, and Cameco and JCU's share of joint venture expenses
is 15% and 10%, respectively. See “Mineral Properties –
Wheeler River”.





Also in January,
UI and Denison entered into an extension agreement (the
“Extension Agreement”), pursuant to which it was agreed
that the payment deadline for the contingent payments due under the
GSJV Purchase Agreement would be extended to July 16, 2017,
provided that the outstanding amount would bear interest at a rate
of 5% per annum, payable monthly in arrears. The first payment
under the Extension Agreement was due on or before January 31,
2017. The required payments were not made and UI is in default of
its obligations under the Extension Agreement and GSJV Purchase
Agreement. For further updates, see below in this section and in
“Legal and Regulatory Proceedings”.





In February,
Denison completed the APG Transaction for gross proceeds to Denison
of $43,500,000. See "Denison’s Operations – Cigar Lake
Toll Milling – APG Transaction ".





Co-ordinated with
the closing of the APG Transaction, the maturity date under the
Credit Facility was extended to January 31, 2018 and the terms
of the Credit Facility were amended to reflect certain changes
required to facilitate an inter-creditor agreement between BNS and
the parties to the APG Transaction. Amongst those changes, BNS and
DMI agreed to replace a restrictive covenant to maintain $5,000,000
on deposit with BNS with a pledge of $9,000,000 in restricted cash
or GIC's as collateral. Under the amended Credit Facility, Denison
will pay letter of credit fees of 0.4% on the first $9,000,000
(associated with the restricted cash), and 2.4% on the remaining
$13,000,000 of letters of credit issued under the
facility.





Also in February,
Mr. Kwang Hee Jeong was appointed to the Board as KHNP
Canada’s representative.





2017
Annual Information
Form         
11





In March, Denison
closed a private placement share offering, under which the Company
issued, in aggregate, 18,337,000 shares of Denison for gross
proceeds of $20,000,290. The aggregate share offering was comprised
of the following three elements: (a) a “Common Share”
offering which consisted of 5,790,000 Shares at a price of $0.95
per Share for gross proceeds of $5,500,500; (b) a “Tranche A
Flow-Through” offering which consisted of 8,482,000 Shares
issued on a “flow-through” basis at a price of $1.12
per Share for gross proceeds of $9,499,840; and (c) a
“Tranche B Flow-Through” offering which consisted of
4,065,000 Shares issued on a “flow-through” basis at a
price of $1.23 per Share for gross proceeds of
$4,999,950.





In April, Denison
completed its winter exploration drilling in the Athabasca Basin.
At Wheeler River, the winter 2017 drilling program was focused on
two objectives: (1) continued infill and delineation drilling of
the Gryphon deposit, in order to upgrade the estimated inferred
resources to an indicated level of confidence, and (2) exploration
drilling outside of the current resources estimated for the Gryphon
deposit, with the aim of discovering additional resources. The
winter 2017 drilling program at Wheeler River was completed with a
total of 14,732 metres drilled in 26 holes. Drilling results at
Wheeler River included intersections of high-grade mineralization
within the D Series lenses of mineralization, located within 200
metres north and northwest of the Gryphon deposit. Other notable
winter results included high grade intersections from infill
drilling within the Gryphon deposit’s A, B and C series
lenses, where 17 drill holes, totaling approximately 8,402 metres,
were completed as part of the winter 2017 program. Winter drilling
programs were also completed by the Company at Waterbury Lake (9
holes, 4,803 metres), Murphy Lake (9 holes, 3,433 metres) and
Crawford Lake (1 hole, 519 metres). A further 5,029 metres of
drilling was completed in 17 holes on the Wolly project by Orano
Canada.





In July, Denison
announced that DES had entered into a new two year services
agreement with Rio Algom Limited, which is a subsidiary of BHP
Billiton Limited. Pursuant to the agreement, DES will be
responsible for the management and operation of nine decommissioned
mine sites in Ontario and two in Quebec from July 1, 2017 to June
30, 2019, including the operation of water treatment plants and
tailings management facilities; environmental monitoring and
compliance, data management, and regulatory reporting; maintenance
of roads, dams and electrical infrastructure; site management,
including health and safety, procurement, logistics, and budgeting
activities; and project management and execution for various
projects, including infrastructure upgrades and replacements,
engineering and environmental programs, as well as water management
initiatives.





In September,
Denison reported the completion of the summer exploration drilling
program at the Waterbury Lake project. The summer 2017 drill
program at Waterbury Lake commenced in late July and was highly
successful, returning several high-grade uranium intersections from
a target area located approximately 1.5 kilometres to the northeast
of the property’s J Zone uranium deposit. Following the
discovery of uranium mineralization in the first four drill holes
of the program, the scope of the program was increased in late
August to allow for a total of 9 drill holes. Of the eight drill
holes designed to test for basement-hosted mineralization, seven
holes intersected significant mineralization, including 9.1%
U3O8over 3.7 metres (drill hole
WAT17-446A), 1.7% U3O8over
7.5 metres (drill hole WAT17-449) and 1.5% U3O8over 4.5 metres; (drill hole
WAT17-450A).Taken
together, the summer program included a total of 3,722 metres
drilled and resulted in the wide-spaced definition (approximately
50 x 50 metre drill hole spacing) of a significant zone of entirely
basement-hosted mineralization with geological features consistent
with basement-hosted deposits in the Athabasca Basin. The new zone
of mineralization at the Waterbury Lake project has been named the
“Huskie” zone.





2017
Annual Information
Form         
12





Also in
September, Denison and KHNP Canada entered into an amended and
restated strategic relationship agreement dated September 19, 2017
(the “KHNP
SRA”), on substantially similar terms as the prior
strategic relationship agreement with KEPCO. The KHNP SRA was
entered into in connection with the December 2016 transfer by KEPCO
of substantially all of its indirect ownership of Denison’s
shares to KHNP Canada. See “Risk Factors – Potential
Influence of KEPCO and KHNP”.





In November, the
Company announced the completion of the summer 2017 drilling
program at the Wheeler River project, including a total of 64 drill
holes (totalling 29,224 metres). The drilling program was focused
within, and in the immediate vicinity of, the Gryphon deposit ahead
of a planned update to the mineral resource estimate for the
property. Highlights from the summer drilling program included: (1)
expansion of high-grade mineralization within the D series lenses;
(2) discovery and expansion of the E series lenses both at the
unconformity and within the upper basement; and (3) expansion of
the A and B series lenses both up-dip and down dip. The Company
also successfully completed the definition drilling program on the
Gryphon deposit’s A, B and C series lenses, with the
objective of increasing the confidence of the previously estimated
mineral resources from an inferred to indicated level. A summer
drilling program was also completed by the Company at Crawford Lake
(4 holes, 2,068 metres) and a further 5,870 metres of drilling was
completed in 20 holes on the McClean project by Orano
Canada.





In December, the
Company filed a Request for Arbitration under the Arbitration Rules
of the London Court of International Arbitration against UI in
connection with the continued failure of UI to pay to the Company
the contingent consideration payable under the GSJV Purchase
Agreement and the Extension Agreement, with respect to the Mongolia
Transaction. See “Legal and Regulatory
Proceedings”.





Events This Year...





In January, the
Company amended and extended its Credit Facility to January 31,
2019.





Also in January,
Denison announced the results of an updated mineral resource
estimate for the Gryphon deposit on the Wheeler River property. The
Gryphon deposit is estimated to contain, above a cut-off grade of
0.2% U3O8, 61.9 million
pounds of U3O8 (1,643,000 tonnes
at 1.71% U3O8) in indicated
mineral resources, plus 1.9 million pounds of U3O8 (73,000 tonnes at
1.18% U3O8) in inferred
mineral resources. By comparison, the maiden mineral resource
estimate, completed in September 2015, was comprised of inferred
mineral resources of 43.0 million pounds of U3O8 above a cut-off
grade of 0.2% U3O8 (834,000 tonnes
at 2.3% U3O8). With this
update to the resources estimated for the Gryphon deposit, the
combined indicated mineral resources estimated for the Wheeler
River project increased by 88% to 132.1 million pounds
U3O8,
which will be used to support the PFS initiated for the project in
July 2016 and expected to be completed during 2018. Following the
update, Wheeler River retained and improved its standing as the
largest undeveloped high-grade uranium project in the
infrastructure rich eastern portion of the Athabasca Basin. See
“Mineral Properties – Wheeler
River”.





In March, Denison
filed a technical report containing the updated mineral resource
estimate for the Wheeler River property titled "Technical Report
with an Updated Mineral Resource Estimate for the Wheeler River
Property, Northern Saskatchewan, Canada" dated March 15,
2018.





Also in March,
Denison completed a review of an updated mineral resource estimate
for the Midwest project in the technical report titled
“Technical Report with an Updated Mineral Resource Estimate
for the Midwest Property, Northern Saskatchewan, Canada”
dated March 26, 2018, which was publicly filed on March 27,
2018.








2017
Annual Information
Form         
13





THE URANIUM INDUSTRY





In 2017, the
uranium industry weathered yet another difficult and somewhat
volatile year. An oversupplied spot market continued to put
downward pressure on the spot price of U3O8, despite the
announcement of various production curtailments from the
world’s largest uranium producers. After reaching a 12-year
low near US$18.00 per pound U3O8 in December 2016,
the spot price started 2017 at US$20.25 per pound U3O8, traded north of
US$26.00 per pound U3O8 in the first
quarter of the year, retreated back to the US$20.00 per pound
U3O8 level in the
third quarter, then rallied in the fourth quarter to peak at
US$26.50 per pound U3O8 in early December
2017. After a volatile year, the spot price closed 2017 at US$23.75
per pound U3O8 –
representing an increase of over 17% for the year.





Industry insiders
have pointed to multiple reasons for the volatility in spot prices
during 2017 – including negative demand side stories from
nuclear heavy-weight countries like the United States, France and
South Korea, continued disappointment with the rate of nuclear
reactor restarts in Japan, the deferral of utility contracting
activity, and an abundance of secondary supplies entering the
market (including underfeeding from under-utilized enrichment
plants). These negative stories were offset at various times during
the year by high profile production curtailments announced by
Cameco and National Atomic Company Kazatomprom (“Kazatomprom”). The oversupplied
spot market has also weighed on the long-term contract price of
uranium, which has fallen 30% over the past two years, from a price
of US$44.00 per pound U3O8 at the beginning
of 2016 to US$31.00 per pound U3O8 at the end of
2017. With only an estimated 75 million pounds U3O8 contracted during
2017 (approximately 30% of the annual contract volumes seen during
the 2005-2012 contracting cycle), there have been few opportunities
for the market to truly discover an appropriate long-term price for
uranium.





Low prices and
minimal contracting volumes seem illogical when juxtaposed to
statistics from the U.S. Energy Information Administration and
American Nuclear Society regarding the fact that, on a net basis,
more new nuclear power capacity was added to the global electricity
grid during 2015 and again in 2016 than in any other year over the
last 25 years. This view is bolstered by the fact that a uranium
price in the low US$20.00 per pound range puts pressure on even the
lowest cost producing uranium mines in the world to turn a profit
on an all-in cost basis. With demand forecasts for uranium
increasing steadily through 2030, meaningful new nuclear capacity
is expected to come onto the grid while the uranium mining
production pipeline has been stagnated by several years of low
uranium prices. Uranium prices at current levels fail to
incentivize the majority of undeveloped uranium projects towards
construction, and, as a result, logic would suggest that prices
should be on the rise. Underpinning that logic, however, is the
assumption that growing demand in the future translates into
increased buying today, and an oversupplied spot market, and
historically low prices, will be fixed by opportunistic buying for
long-term utility needs.





Volumes in the
spot market during 2017 were sporadic, varying week to week with a
total volume of approximately 44 million pounds U3O8 being traded
during the year. With buyers staying on the sidelines, sellers have
simply outnumbered buyers in the market and prices have battled
downward pressure all year. This dynamic, combined with the reality
of higher priced long term contracts falling off in the not too
distant future, led to the announcement of significant production
curtailments in 2017. The most notable of these curtailments being
Cameco’s announcement regarding the shut-down of the McArthur
River mine for 10 months (or longer, depending on market
conditions). The McArthur River mine is the largest and highest
grade uranium mine in the world. The announced curtailment
represents the removal of approximately 15 million pounds
U3O8 from the market
in 2018, and up to 18 million pounds U3O8 in future
years.





2017
Annual Information
Form         
14





Kazatomprom, the
world’s largest uranium producer, also declared that it would
exercise restraint in 2017 and future years, having announced in
early 2017 that it would cut production by 10% in 2017. Later in
2017, Kazatomprom also confirmed that it would constrain production
levels for a further 3 years, through the end of 2020.





As a result of
these and other production curtailments, various analysts are now
expecting that the uranium market could swing to a deficit position
in the near future, which would help to consume excess inventories
that could otherwise leak into the market as secondary supplies.
For a price recovery to be sustained, however, utility buying must
resume and contracting volumes must increase as utilities work
towards securing approximately 1.2 billion pounds U3O8 in estimated
uncovered uranium requirements for the period of 2018 to
2030.





Much of the
uncovered future demand is estimated to come from non-U.S.
utilities, as growth in nuclear energy is expected to be driven by
increasing nuclear generating capacities in Asia – primarily
from China and India. According to the World Nuclear Association
(“WNA”), as of February 1, 2018, China had 38 operable
nuclear reactors capable of producing 34.6 gigawatts of
electricity. A further 20 reactors are under construction and an
additional 182 reactors are either planned or proposed. Ux
Consulting Company, LLC (“UxC”) estimates that 99
reactors are expected to be operable and capable of producing over
98.5 gigawatts of electricity in China by 2030. To achieve this
level of production, China’s fleet of nuclear reactors will
have to increase by between 5 and 6 reactors each year for the next
12 years. The WNA is projecting a similar growth profile for India,
where 22 reactors were operable as of February 1, 2018, capable of
producing 6.2 gigawatts of power. Taken together, 65 reactors are
either under construction, planned or proposed in India. UxC
estimates that India could have over 15 gigawatts of nuclear energy
operable by 2030, representing over 2 times as much power capacity
as is currently available from nuclear. To achieve this level of
production, India’s fleet of nuclear reactors will have to
increase by one additional reactor each year over the next 12
years.





With few economic
sources of new supply able to advance through the project
development pipeline, in this market, and the potential for
additional production curtailments as high-priced contracts at
various high-cost operations are expected to drop off in the coming
years, a significant utility contracting cycle is expected to lead
to the realization that current uranium prices are well below the
level required to incentivize sufficient new sources of primary
supply into the market. This could lead to a sustained market of
rising prices, as buyers are forced to bid up the price to secure
available supplies of uranium or incentivize new sources of supply
into the market.





Uranium Demand





The WNA reports
that there are 448 nuclear reactors operable in 30 countries as of
February 2018. These reactors can generate 393.1 gigawatts of
electricity and supply approximately 11% of the world's electrical
requirements (21% in Organisation for Economic Co-operation and
Development (OECD) member countries). As of February 2018, 57
nuclear reactors are under construction in 15 countries with the
principal drivers of this expansion being China (20 reactors under
construction), Russia (6), India (6), UAE (4), and South Korea (4).
Based on statistics from the WNA, dated February 2018, there are a
total of 215 reactors that are either under construction, or
planned around the world, and an additional 351 reactors that are
proposed.





2017
Annual Information
Form         
15





According to
UxC’s Q1 2018 Uranium Market Outlook (“Q1 2018 Outlook”), global nuclear
power capacities are projected to increase from approximately 375
gigawatts as of November 2017 to over 446 gigawatts by 2030. UxC
also estimates that annual uranium demand could grow by over 55% to
more than 295 million pounds U3O8 by 2035 from an
estimated 190 million pounds U3O8 in 2017. In the
Q1 2018 Outlook, UxC estimates base case demand in 2018 to be 194.1
million pounds U3O8.





Primary Uranium Supply





According to
UxC’s Q4 Outlook, uranium production for 2017 was estimated
to decrease by nearly 7% year over year from 162.0 million pounds
U3O8 in 2016 to 151.1
million pounds U3O8 in 2017.
Production in 2018 is expected to decrease even further, with the
Q1 2018 Outlook projecting 2018 production to drop a further 6.7%
(from 2017 estimates) to only 141.1 million pounds U3O8. Production from
Canada, Kazakhstan, Australia, Africa and the United States all
declined in 2017, while production from Russia remained essentially
flat. Production in Canada decreased by nearly 6% or 2.1 million
pounds U3O8. Cigar Lake
production is expected to remain constant at 18 million pounds of
U3O8 per year through
2025. McArthur River has been modeled by UxC to produce 1 million
pounds of U3O8 in 2018 (owing to
the announced 10 month shut-down). Canada remains the second
largest producing nation with approximately 23% of the
world’s production from 2017 coming from within Canada.
Kazakhstan continues to be the world’s largest producer of
uranium, representing approximately 40% of production in
2017.





UxC estimates in
its Q1 2018 Outlook that existing mine production, plus new planned
and potential mine production, will increase primary uranium supply
to 161.7 million pounds U3O8 by 2020, before
declining to only 115.9 million pounds U3O8 by 2030. At its
height in 2020, the projected production levels include the
resumption of mining at McArthur River (estimated at 18.7 million
pounds U3O8 per year) and
represents a total increase of only 7% from estimated 2017
production levels. This is in contrast to the dramatic increases in
uranium demand outlined above. In past years, UxC projected that
Kazakhstan was expected to continue to be one of the principal
drivers for the increases in primary mine production. In the Q1
2018 Outlook, the main drivers are now limited to the resumption of
mining at McArthur River and the ramp up of production at the Husab
mine in Namibia. For other projects to move forward to increase
UxC’s production forecasts, uranium prices will need to
increase appreciably to support their higher cost production
profiles and the significant capital expenditures that will be
required.





Secondary Uranium Supply





In the Q1 2018
Outlook, primary mine production is estimated to supply
approximately 73% of estimated 2018 base case demand (compared to
approximately 80% in 2017). The balance of demand is expected to be
supplied from secondary sources such as commercial inventories,
reprocessing of spent fuel, sales by uranium enrichers and
inventories held by governments, in particular the U.S. Department
of Energy. In years prior to 2017, primary supplies have normally
made up 85% or more of annual demand.





Excess commercial
inventories, which were once one of the major sources of secondary
supplies during the period from the early 1970s to the early 2000s,
have largely been consumed; however, as a result of the shutdown of
the German nuclear program and the continued shut down of the
majority of the Japanese nuclear fleet, commercial inventories
could become a more significant factor. A large source of secondary
supplies continues to be government inventories, particularly in
the U.S. and Russia. The disposition of these inventories may have
a market impact over the next 10 to 20 years, although, the rate
and timing of this material entering the market is
uncertain.





2017
Annual Information
Form         
16





Secondary
supplies remain a complexity of the uranium market. The Q1 2018
Outlook forecasts that 49.7 million pounds U3O8 will enter the
market from secondary supplies in 2018, leaving a shortfall of 3.3
million pounds U3O8 for supplies to
match the base case demand scenario for 2018.





Looking ahead,
UxC expects that secondary sources of supply will fall from
estimated 2018 levels to 23 million pounds U3O8 per year by
2030.





Uranium Prices





Nuclear utilities
purchase uranium primarily through long-term contracts. These
contracts usually provide for deliveries to begin two to four years
after they are signed and provide for delivery from four to ten
years thereafter. In awarding medium and long-term contracts,
electric utilities consider the producer’s uranium reserves,
record of performance and production cost profile, in addition to
the commercial terms offered. Prices are established by a number of
methods, including base prices adjusted by inflation indices,
reference prices (generally spot price indicators, but also
long-term reference prices) and annual price negotiations.
Contracts may also contain annual volume flexibility, floor prices,
ceiling prices and other negotiated provisions. Under these
contracts, the actual price mechanisms are usually
confidential.





The long-term
demand that actually enters the market is affected in a large part
by utilities’ uncovered requirements. UxC estimates, in the
Q1 2018 Outlook, that uncovered demand is only 4.4 million pounds
U3O8 in 2018.
Uncovered demand, however, is projected by UxC to increase
significantly over the period of 2018 to 2020, such that up to 27.9
million pounds remains uncovered for 2020. Annual uncovered demand
rises rapidly for years after 2020, to 108.6 million pounds
U3O8 for 2025 and over
138.2 million pounds U3O8 for 2030
(representing roughly 80% of total base case demand in those
years). Taken together, nearly 1.1 billion pounds U3O8 remain uncovered
between 2018 and 2030. At 138.2 million pounds, uncovered demand in
2030 is over 35 million pounds U3O8 more than total
production expected from existing uranium mines for the same year.
In order to address the rising portion of demand that is uncovered,
utilities will have to return to the market and enter into
long-term contracts. From 2006 to 2010, on average, 39 million
pounds U3O8 equivalent were
purchased on the spot market per year and roughly 200 million
pounds U3O8 equivalent were
contracted in the long term market each year. In 2017, by
comparison, 43.5 million pounds U3O8 equivalent were
purchased on the spot market, and approximately 73 million pounds
U3O8 equivalent were
contracted in the long term market. With low contract volumes in
recent years and increasing uncovered requirements, we expect that
long term contracting activity will have to increase in the near
future as utilities look to secure supply and move U3O8 through the
nuclear fuel cycle in order to fuel the world’s growing fleet
of nuclear reactors.





The long-term
price is published on a monthly basis and began the year at
US$30.00 per pound U3O8. On low volumes,
as noted above, the long-term price increased to US$31.00 per pound
U3O8 by the end of the
year.





Electric
utilities procure their remaining uranium requirements through spot
and near-term purchases from uranium producers, traders and other
suppliers. Historically, spot prices are more volatile than
long-term prices. The spot price began the year at US$20.25 per
pound U3O8 and ended the
year at US$23.75 per pound U3O8.





2017
Annual Information
Form         
17





Competition





The uranium
industry is small compared to other commodity industries, in
particular other energy commodity industries. Uranium demand is
international in scope but supply is characterized by a relatively
small number of companies operating in only a few countries.
Production, in general, is concentrated amongst a small number of
producers and is also geographically concentrated with
approximately 70% of the world’s production in 2017 coming
from only three countries: Kazakhstan, Canada, and
Australia.





Competition is
somewhat different amongst exploration & development companies
focused on the discovery or development of a uranium deposit.
Exploration for uranium is being carried out on various continents,
but expenditures by public companies have been generally
concentrated in recent years in Canada, Africa and Australia. In
Canada, exploration has focused on the Athabasca Basin region in
northern Saskatchewan. Explorers have been drawn to the Athabasca
Basin region by the high-grade uranium deposits that have produced
some of the most successful uranium mines operating in the world
today. Within the Athabasca Basin region, exploration is generally
divided between activity that is occurring in the eastern portion
of the Basin and the western portion of the Basin. The eastern
Basin is a district that is defined by rich infrastructure
associated with the existence of several operating uranium mines
and uranium processing facilities. Infrastructure includes access
to the provincial power grid and a network of provincial all
weather highways. By comparison, in the western Basin, there are no
operating uranium mines or processing facilities and access to the
provincial power grid is not currently available. Several uranium
discoveries have been made in the Athabasca Basin region in recent
years, and competition for capital can be intense.





























2017
Annual Information
Form         
18





MINERAL RESERVES AND MINERAL RESOURCES





Dale Verran, MSc,
P.Geo, Pr.Sci.Nat., Denison's Vice President Exploration, who is a
“Qualified Person” in accordance with the requirements
of NI 43-101, is responsible for the mineral resource estimates for
the Company’s properties and all disclosure of scientific or
technical information concerning mineral resources in this AIF,
except as otherwise provided herein.





Summary of Mineral Reserves and Mineral Resources





NI 43-101
requires mining companies to disclose mineral reserve and resource
estimates using the subcategories of proven mineral reserves,
probable mineral reserves, measured mineral resources, indicated
mineral resources and inferred mineral resources.





The following
tables show the Company's estimates of mineral reserves and mineral
resources as of the date of this AIF. Such estimates are reported
in the applicable technical reports prepared in accordance with NI
43-101, adjusted for mining activity where applicable. The summary
information below on Denison’s mineral reserve estimates was
prepared from the year-end stockpile survey reported by Orano
Canada, the operator of the McClean Lake joint
venture.





For full details,
reference should be made to the applicable technical reports for
the properties.





See
“Mineral Properties” for more information.





Proven Mineral Reserve Estimates





100% Basis



Company Share5Project/Deposit
Tonnes
Grade
% U3O8
Pounds of U3O8
(,000)

Pounds of U3O8
(,000)McClean - Ore
Stockpile
88,000
0.38
738

166





Indicated Mineral Resource
Estimates (1)(2)





100% Basis

Company Share5Project/Deposit
Tonnes
Grade
% U3O8
Pounds of U3O8
(,000)

Pounds of U3O8
(,000)Wheeler
River - Phoenix
166,000
19.1
70,200

44,400Wheeler
River - Gryphon
1,643,000
1.7
61,900

39,200Wheeler River Subtotal
1,809,000

132,100

83,600McClean
- Caribou
47,800
2.6
2,800

600McClean
- Sue D
122,800
1.1
2,800

600McClean
- McClean North
205,800
2.8
12,400

2,800McClean Subtotal
376,400

18,000

4,000Midwest
- Midwest Main
453,000
4.0
39,900

10,100Midwest
- Midwest A
566,000
0.87
10,800

2,700Midwest Subtotal
1,019,000

50,700

12,800Waterbury
- J Zone
291,000
2.0
12,800

8,200Total Indicated Mineral Resources
3,495,800

213,600

108,600





2017 Annual Information Form   
      19





Inferred Mineral Resource
Estimates (1)(3)





100% Basis



Company Share5Project/Deposit
Tonnes
Grade
% U3O8
Pounds of U3O8
(,000)

Pounds of U3O8
(,000)Wheeler
River - Phoenix
9,000
5.8
1,100

700Wheeler
River - Gryphon
73,000
1.2
1,900

1,200Wheeler River Subtotal
82,000

3,000

1,900McClean
- Sue D
24,200
0.39
200

0McClean – Sue E(4)
483,400
0.69
7,300

1,600McClean
- McClean North
3,300
0.79
100

0McClean Subtotal
510,900

7,600

1,600Midwest
- Midwest Main
793,000
0.66
11,500

2,900Midwest
- Midwest A
53,000
5.8
6,700

1,700Midwest Subtotal
846,000

18,200

4,600Total Inferred Mineral Resources
1,438,900

28,800

8,100





Notes:


(1) CIM
Definitions (2014) were followed for classification of mineral
resources. Mineral resources are not mineral reserves and do
not have demonstrated economic viability. No mineral reserves have
as yet been defined.


(2) The
indicated mineral resources were estimated at various cut-off
grades. They are:


●
 Phoenix:  0.80% U3O8


●
 Gryphon:  0.20% U3O8


●
 Caribou:  0.10% U3O8


●
 Sue D:  0.10% U3O8


●
 McClean North: 0.10% U3O8


●
 Midwest Main: 0.10% U3O8
(0.085% U)


●
 Midwest A:  0.10% U3O8
(0.085% U)


●
 J Zone:  0.10% U3O8


(3) The inferred mineral resources were estimated at
various cut-off grades. They are:


●
 Phoenix:  0.80% U3O8


●
 Gryphon:  0.20% U3O8


●
 Sue D:  0.10% U3O8


●
 Sue E:  0.10% U3O8


●
 McClean North: 0.10% U3O8


●
 Midwest Main: 0.10% U3O8
(0.085% U)


●
 Midwest A:  0.10% U3O8
(0.085% U)


(4) The operator conducted
confirmatory drilling on a portion of these mineral resources
outside the designated pit and late in 2006 submitted a preliminary
analysis detailing an inferred mineral resource of approximately 2
million pounds on a 100% basis in this area, as compared to the 7.3
million pounds that Scott Wilson Roscoe Postle Associates Inc.
(“Scott Wilson
RPA”), now Roscoe Postle Associates Inc., has
estimated in its February 2006 technical report. Roscoe Postle
Associates Inc. has not re-estimated the mineral resource using the
new drill information.


(5) As at
December 31, 2017, pursuant to the terms of the agreements with its
applicable joint venture partners, the Company had a 63.30%
interest in the Wheeler River project, a 22.50% interest in the
McClean Lake property; a 25.17% interest in the Midwest project;
and a 64.22% interest in the Waterbury Lake
property.


(6) Numbers may not add due to
rounding.





2017
Annual Information
Form         
20





The tables below
detail the changes to the Company’s mineral reserve and
mineral resource estimates from the financial year ended December
31, 2016 to March 27, 2018.





Change to Denison’s Share of Proven Mineral
Reserves


(in thousands of pounds
U3O8)





Reserves
December 31, 2016

Additions
(Deletions)

March 27, 2018McClean - Ore
Stockpile
153

13(1)

166





Change to Denison’s Share of Probable Mineral
Reserves


(in thousands of pounds
U3O8)





Reserves
December 31, 2016

Additions
(Deletions)

March 27, 2018McClean –
SABRE Pond
13

(13)(1)

0





Change to Denison’s Share of Indicated Mineral
Resources


(in thousands of pounds
U3O8)





Resources
December 31,
2016

Additions
(Deletions)

March 27, 2018Wheeler River
– Phoenix
42,100

2,300(2)

44,400Wheeler River
– Gryphon
0

39,200(2)(3)

39,200Midwest –
Midwest Main
10,800

(700)(4)

10,100Midwest –
Midwest A
1,500

1,200(4)

2,700Waterbury –
J Zone
8,100

100(5)

8,200





Change to Denison’s Share of Inferred Mineral
Resources


(in thousands of pounds
U3O8)





Resources
December 31,
2016

Additions
(Deletions)

March 27, 2018Wheeler River
– Gryphon
25,800

(24,600)(2)(3)

1,200Midwest –
Midwest Main
100

2,800(4)

2,900Midwest –
Midwest A
1,100

600(4)

1,700





Notes:


(1)
 Mineralized material was
moved from the McClean SABRE Pond to the McClean Ore Stockpile
during summer 2017.


(2)
 The Company increased its
interest in the Wheeler River project during 2017 from 60% to
63.3%, in accordance with an agreement with its WRJV JV Parties, as
announced on January 10, 2017.


(3)
 Also a result of the updated
mineral resource estimate, and the conversion of mineral resources
from the inferred to indicated categories, as described in the
Wheeler Technical Report.


(4)
 A result of the updated
mineral resource estimate for the Midwest property, as described in
the Midwest Technical Report.


(5)
 The Company increased its
interest in the Waterbury Lake project by 1.21% in 2017, in
accordance with the terms of the Waterbury Lake Limited Partnership
Agreement and other agreements with the Waterbury Lake
partners.


(6)
 Numbers may not add due to
rounding.





2017
Annual Information
Form         
21





Historical Estimates





McClean South Historical Estimate





On the McClean
Lake Joint Venture property, the McClean South trend is located
parallel to and approximately 500 metres south of the McClean North
trend (see “Mineral Properties – McClean Lake”).
There are two presently known mineralized pods which were drilled
by Canadian Oxy during 1979-1980: the Southwest Pod and the
Southeast Pod. The original owner of the property, Canadian Oxy,
prepared estimates of tonnages, grades and contained uranium for
these deposits as of 1980, which have
not been verified by Denison. The results of these estimates
are set out below. The Company is not treating this historical
estimate as current mineral resources or mineral
reserves.





McClean South Historical
Estimates (1)(2)





100% Basis

Company’s ShareDeposit
Tons
(,000)
Grade
(% U3O8)
Pounds of U3O8
(,000)

Pounds of U3O8
(,000)Southwest
Pod
47.6
2.10
2,000

500Southeast
Pod
126.7
0.73
1,900

400





Notes:


(1) The
historical estimates do not comply with the requirement of NI
43-101. CIM definitions are not used.


(2) The
historical estimates cannot be
verified and the estimates are not necessarily indicative of the
mineralization on the property.





This trend will
require future evaluation to upgrade this historical estimate as a
current mineral resource estimate.























2017
Annual Information
Form         
22





MINERAL PROPERTIES








Denison’s
Priority Properties:

●Wheeler River

●Waterbury Lake

●McClean Lake

●Midwest

●Other Exploration
Properties
Page 25

Page 37

Page 48

Page 54

Page 63








Denison’s
priority mineral exploration properties are located in the
Athabasca Basin, the majority of which are located in the eastern
Athabasca Basin, which is host to existing infrastructure including
uranium mines and mills, and provincial powerlines and highways
(see location map, below). As of December 31, 2017, Denison has
interests in 38 mineral properties in Saskatchewan, comprised of
267 claims covering 351,364 hectares.





Location Map of Denison’s Athabasca Basin Mineral
Properties














2017
Annual Information
Form         
23








Athabasca Basin Overview





The Athabasca
Basin covers an area of approximately 100,000 square kilometres in
northern Saskatchewan and northeastern Alberta. The Athabasca Basin
is host to the world’s largest high-grade uranium mines and
deposits including the McArthur River mine and Cigar Lake mine
located in the eastern Athabasca Basin. The deposits are classified
as unconformity-associated (also unconformity-related and
–type) deposits owing to their spatial association with a
major unconformable contact between a relatively undeformed
Proterozoic sedimentary basin (the Athabasca Basin) and underlying
metamorphosed and deformed Archean to Palaeoproerozoic basement
rocks.





Since the
discovery of Key Lake in 1975-1976, the Key Lake exploration model
has emphasized the occurrence of uranium mineralization proximal to
the sub-Athabasca unconformity at locations where graphitic pelite
units in the basement meet the basal Athabasca sandstone. The
graphitic pelite units are commonly intensely sheared in contrast
to the physically more competent rock types that include
non-graphitic pelite, semi-pelite, psammite, meta-arkose, or
granite gneiss. Airborne and ground electromagnetic systems are
commonly used to map conductive graphitic pelite units versus the
relatively resistive and non-conductive quartz-feldspathic rock
types.





However, since
the discovery of the McArthur River deposit in 1988, the McArthur
River exploration model has emphasized the importance of basement
quartzites occurring in proximity to uranium mineralization. Highly
competent quartzites provide a strong rheological contrast to other
metasediments and therefore control the sites of major thrust,
reverse, and strike-slip faults. Although these faults are loci for
mineralization; the poor conductivity, low magnetic
susceptibilities and specific gravity (density) values associated
with quartzite, as well as other quartz-feldspathic rocks, limits
the effectiveness of airborne and ground geophysical methods in
mapping these basement units. This is particularly so when they are
covered by hundreds of metres of Athabasca sandstone. Alteration
haloes are typically larger than the deposit footprints, and are
characterized by changes in mineralogy and major and trace
elements. Therefore, the detection of alteration halos through
geophysics, primarily DC resistivity surveys, and drill core
lithogeochemistry and reflectance spectrometry have become
increasingly important exploration methodologies.





More recently,
basement-hosted deposits have become more recognized as a viable
exploration target through the development of the Eagle Point mine
and the discovery of deposits such as Millennium, Gryphon, Triple R
and Arrow. Exploration typically requires the recognition of
significant fault zones within basement metasediments (often
associated with graphite) with associated clay and geochemical
alteration haloes.





2017
Annual Information
Form         
24





Wheeler River





The Wheeler River
project is owned by Denison (63.30%) and its joint venture
partners, Cameco (26.70%) and JCU (10.00%) pursuant to the Wheeler
River Joint Venture. Denison is the operator/manager of the
project.





This project
description is a summary, based on the project’s technical
report entitled “Technical Report with an Updated Resource
Estimate for the Wheeler River Property, Northern Saskatchewan,
Canada,” dated March 15, 2018 (the “Wheeler Technical Report”), a copy
of which is available on the Company’s profile on the SEDAR
website at www.sedar.com. The Wheeler
Technical Report was authored by Mr. Mark Mathisen, C.P.G. of
Roscoe Postle Associates Inc. (“RPA”) and Mr. Ken Reipas, P.Eng of
SRK Consulting (Canada) Inc. (“SRK Consulting”), both of whom are
independent Qualified Persons in accordance with the requirements
of NI 43-101.





The Wheeler
Technical Report describes the results of the PEA undertaken by the
Company on the Wheeler River project with an effective date of
March 31, 2016, which is based on the mineral resource estimates
for the Gryphon deposit effective September 25, 2015 and the
Phoenix deposit effective May 28, 2014. The Wheeler Technical
Report also includes the results from an update to the estimated
mineral resources for the Gryphon Deposit effective January 30,
2018. The impact of the updated estimated mineral resources have
not been reflected in the PEA for the Wheeler River project.
Denison anticipates incorporating the updated mineral resource
estimate for the Gryphon deposit in the PFS for the Property. Work
related to the PFS was commenced in 2016, following the release of
the PEA, and is expected to be completed during 2018.





The conclusions,
projections and estimates included in this description are subject
to the qualifications, assumptions and exclusions set out in the
technical report. We recommend you read the technical report in its
entirety to fully understand the project.





Property Description, Location and Access





The property is
located along the eastern edge of the Athabasca Basin in northern
Saskatchewan, Canada and is located approximately 35 km
north-northeast of the Key Lake mill and 35 km southwest of the
McArthur River uranium mine.





Access to the
property is by road or air from Saskatoon. The property is well
located with respect to all-weather roads and the provincial power
grid. Vehicle access to the property is by the provincial highway
system to the Key Lake mill then by the ore haul road between the
Key Lake and McArthur River operations to the eastern part of the
property. An older access road, the Fox Lake Road, between Key Lake
and McArthur River, provides access to most of the northwestern
side of the property. Gravel and sand roads and drill trails
provide access by either four-wheel-drive or all-terrain-vehicle to
the rest of the property.





The property
consists of 19 mineral claims totaling 11,720 hectares, with an
annual assessment requirement of $293,000 to maintain title to the
mineral claims. Based on previous work submitted and approved by
the province of Saskatchewan, there is sufficient assessment
credits available to keep title on the property secure until
2035.





Any uranium
produced from the Wheeler River property is subject to uranium
mining royalties in Saskatchewan in accordance with Part III of The
Crown Mineral Royalty Regulations. See "Government Regulation -
Canadian Royalties.” There are no other back-in rights or
royalties applicable to this property.





2017 Annual Information Form   
      25





There are no
known environmental liabilities associated with the property, and
there are no other significant factors and risks that may affect
access, title, or the right or ability to perform work on the
property. All the necessary permits for surface exploration on the
property are in place and current.





The Province of
Saskatchewan and the Athabasca Basin communities have a long
history of supporting the uranium industry. In 2016 Denison
initiated community engagement activities with stakeholder groups,
including discussions regarding employment and business
opportunities, and the discussions and meetings have overall been
very positive.





Location and Basement Geology Map, Showing Regional
Infrastructure.








2017
Annual Information
Form         
26





History





The Wheeler River
property was staked on July 6, 1977, due to its proximity to the
Key Lake uranium discoveries, and was vended into an agreement on
December 28, 1978 between AGIP Canada Ltd., E&B Explorations
Ltd. and Saskatchewan Mining Development Corporation, with each
holding a one-third interest. On July 31, 1984, each party divested
a 13.3% interest and allowed Denison Mines Limited, a predecessor
company to Denison, to earn in to a 40% interest.





In late 2004,
Denison entered into an agreement to earn a further 20% interest by
expending $7,000,000 within six years. At that time, Denison became
the project operator. In 2007, when the earn-in obligations were
completed, the participating and ownership interests were Denison
60%; Cameco 30%, and JCU 10% and they remained that way up to the
end of 2016. In January 2017, Denison, Cameco and JCU executed an
agreement, pursuant to which the JV Parties have agreed to allow
for a one-time election by Cameco to fund 50% of its ordinary share
(30%) of joint venture expenses in 2017 and 2018. The shortfall in
Cameco's contribution will be funded by Denison, in exchange for a
transfer to Denison of a portion of Cameco's interest in the WRJV.
Accordingly, Denison's share of joint venture expenses is 75% in
2017 and 2018, and Cameco and JCU's participating share of joint
venture expenses is 15% and 10%, respectively. As a result of that
agreement, at December 31, 2017, the ownership interests were
Denison 63.3%, Cameco 26.7% and JCU 10%.





Historical
drilling campaigns were reconnaissance in nature and were largely
designed to test electromagnetic conductors, interpreted to
represent graphite-rich basement rocks at the sub-Athabasca
unconformity, in widely-spaced holes typically 300 to 600 metres
apart. Historical drilling statistics included:


1979 –
1984 AGIP Canada Ltd. 61 holes (19, 646
metres)


1985 –
1989 SMDC   57 holes (24,430
metres)


1995 –
2004 Cameco  37 holes (19,265
metres)





During its
operatorship, Cameco (formerly SMDC) had identified a major
geological unit termed the "quartzite ridge" and had noted
extensive dravite (boron) alteration in the overlying sandstones.
Cameco also discovered several uranium mineralized intercepts that
occurred in a variety of geological settings throughout the
property.





Geological Setting, Mineralization and Deposit Types





The Wheeler River
property is located near the southeastern margin of the Athabasca
Basin in the southwest part of the Churchill Structural Province of
the Canadian Shield. The Athabasca Basin is a broad, closed, and
elliptically shaped, cratonic basin with an area of 425 km
(east-west) by 225 km (north-south). The bedrock geology of the
area consists of Archean and Paleoproterozoic gneisses
unconformably overlain by up to 1,500 m of flat-lying,
unmetamorphosed sandstones and conglomerates of the mid-Proterozoic
Athabasca Group. The property is located near the transition zone
between two prominent litho-structural domains within the
Precambrian basement, the Mudjatik Domain to the west and the
Wollaston Domain to the east. The Mudjatik Domain is characterized
by elliptical domes of Archean granitoid orthogenesis separated by
keels of metavolcanic and metasedimentary rocks, whereas the
Wollaston Domain is characterized by tight to isoclinal,
north-easterly trending, doubly plunging folds developed in
Paleoproterozoic metasedimentary rocks of the Wollaston Supergroup,
which overlie Archean granitoid orthogenesis identical to those of
the Mudjatik Domain. The area is cut by a major northeast-striking
fault system of Hudsonian Age. The faults occur predominantly in
the basement rocks but often extend up into the Athabasca Group due
to several periods of post-depositional movement.





2017
Annual Information
Form         
27





Local geology is
comprised of little-deformed late Paleoproterozoic to
Mesoproterozoic Athabasca Group strata comprised of Manitou Falls
Formation sandstones and conglomerates which unconformably overlie
the crystalline basement and have a considerable thickness from 170
metres over the quartzite ridge to at least 560 metres on the
western side of the Property. Basement rocks beneath the Phoenix
and Gryphon deposits are part of the Wollaston Domain and are
comprised of metasedimentary and granitoid gneisses. The
metasedimentary rocks belong to the Wollaston Supergroup and
include graphitic and non-graphitic pelitic and semipelitic
gneisses, meta-quartzite, and rare calc-silicate rocks together
with felsic and quartz feldspathic granitoid gneisses. Pegmatitic
segregations and intrusions are common in all units with garnet,
cordierite, and sillimanite occurring in the pelitic strata,
indicating an upper amphibolite grade of metamorphism. Graphitic
pelite and quartzite units appear to play important roles in the
genesis of Athabasca Basin unconformity-type deposits. Thus the
presence of extensive subcrop of both units: 18 kilometres of
quartzite and 152 line-kilometres of conductors (assumed to be
graphitic pelite), greatly enhances the economic potential of the
Wheeler River property. The Wheeler River property is partially
covered by lakes and muskeg, which overlie a complex succession of
glacial deposits up to 130 metres in thickness. These include
eskers and outwash sand plains, well-developed drumlins, till
plains, and glaciofluvial plain deposits. The orientation of the
drumlins reflects southwesterly ice flow.





The Phoenix
uranium deposit was discovered in 2008 and can be classified as an
unconformity-related deposit of the unconformity-hosted variety.
The deposit straddles the sub-Athabasca unconformity approximately
400 metres below surface and comprises three zones (A, B, C) which
cover a strike length of 1.1 kilometres. The deposit comprises an
exceptionally high grade core surrounded by a lower grade shell.
The deposit is interpreted to be structurally-controlled by the WS
shear, a prominent basement thrust fault which occurs footwall to a
graphitic-pelite and hangingwall to a garnetiferous pelite and
quartzite unit. Mineralization within the Phoenix deposit lenses is
dominated by massive to semi-massive uraninite associated with an
alteration assemblage comprising hematite, dravitic tourmaline,
illite and chlorite. Secondary uranium minerals, including
uranophane, and sulphides are trace in quantity.





The Gryphon
uranium deposit was discovered in 2014 and can be classified as an
unconformity-related deposit of the basement-hosted variety. It is
located 3 kilometres northwest of the Phoenix deposit. The deposit
occurs within southeasterly dipping crystalline basement rocks of
the Wollaston Supergroup below the regional sub-Athabasca Basin
unconformity. The deposit is located from 520 to 850 metres below
surface and has an overall strike length of 610 metres, dip length
of 390 metres and varies in thickness between 2 and 70 metres,
depending on the number of mineralized lenses present. The
mineralized lenses are controlled by reverse fault structures which
are largely conformable to the basement stratigraphy and dominant
foliation. The A, B and C series of lenses comprise stacked,
parallel lenses which plunge to the northeast along a fault zone
(“G-Fault”) which occurs between hanging wall
graphite-rich pelitic gneisses and a more competent
pegmatite-dominated footwall. A ubiquitous zone of silicification
(“Quartz-Pegmatite Assemblage”) straddles the G-Fault
and the A, B and C series of lenses occur hanging wall, within, and
footwall to the Quartz-Pegmatite Assemblage respectively. The D
series of lenses occur within the pegmatite-dominated footwall
along a secondary fault zone (“Basal Fault”) or within
extensional relay faults which link to the G-Fault. The E series of
lenses occur along the G-Fault, up-dip and along strike to the
northeast of the A and B series lenses, within the upper basement
or at the sub-Athabasca unconformity. Mineralization within the
Gryphon deposit lenses is dominated by massive, semi-massive or
fracture-hosted uraninite associated with an alteration assemblage
comprising hematite, dravitic tourmaline, illite, chlorite and
kaolinite. Secondary uranium minerals, including uranophane and
carnotite, and sulphides are trace in quantity.








2017
Annual Information
Form         
28





Exploration





From 2005 to the
end of 2017, Denison has conducted numerous geophysical surveys
across the property, in order to generate drill targets. Airborne
surveys have included two electromagnetic surveys (totaling 2,005
line kilometres) and one gravity survey (totaling 1,711 line
kilometres). Ground surveys have included four electromagenetic
surveys (488 line kilometres), 10 resistivity surveys (979 line
kilometres), two gravity surveys (2,920 stations) and 42 downhole
geophysical surveys.





Drilling





From 2005 to the
end of 2017, Denison has completed 330,540 metres of diamond
drilling in 655 holes on the Wheeler River property. The majority
of this drilling has been focused on the discovery and delineation
of the Phoenix (251 holes totaling 115,948 metres) and Gryphon (214
holes totaling 120,351 metres) deposits.





Discovery and Delineation of the Phoenix Deposit





In the summer of
2008, as a direct result of the 2007 DC resistivity survey along
the hanging wall of the quartzite ridge, two drill holes were
located 600 metres apart along the same low resistivity trend. This
drilling intersected a zone of characteristic sandstone alteration
and uranium mineralization linked to unconformity-associated
uranium deposits. All drill holes during the summer of 2008
intersected either uranium mineralization or very strong alteration
close to mineralization.





Subsequent
drilling programs conducted during 2009 and 2010 extended the
mineralized zone for a strike length of greater than 900 metres. An
initial mineral resource estimate was completed at the end of 2010.
Aggressive drilling programs in 2011 and 2012 successfully added
additional mineral resources. In 2013, drilling was completed at
the Phoenix deposit, but a large portion of the 2013 Wheeler River
drilling program was also allocated to exploration of several other
target areas on the property. Some additional infill drilling was
completed at the Phoenix deposit in early 2014, and this work was
successful in extending some high grade mineralization into areas
previously modeled as low grade. These results, combined with
results from 2013 were the catalyst for an updated mineral resource
estimate for the Phoenix deposit in June 2014.





Discovery and Delineation of the Gryphon Deposit





In March 2014,
drill hole WR-556 resulted in discovery of the Gryphon deposit,
intersecting uranium mineralization averaging 15.33% U3O8 over 4.0 metres
in basement graphitic gneiss, 200 metres below the sub-Athabasca
unconformity. The Gryphon deposit occurs on the K-North trend,
which exhibits numerous favourable exploration criteria including
basement quartzite and graphitic gneisses, basement structures,
reverse offsets of the unconformity, weak basement hosted
mineralization near the unconformity, and anomalous sandstone
geochemistry and alteration.





Historical holes
ZK-04 and ZK-06 drilled in the late 1980s, along the K-North trend,
targeted unconformity-related mineralization and intersected
favourable sandstone structure and alteration as well as alteration
and weak mineralization in the basement approximately 35 metres
below the unconformity. Follow-up drilling campaigns attempted to
locate unconformity mineralization up dip of the weak basement
mineralization. Gryphon deposit discovery drill hole WR-556 was the
first to evaluate the down dip projection of these intersections
into the basement.








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Since the
discovery hole at Gryphon, subsequent drilling campaigns in 2014
and 2015 were completed and an initial resource estimate was
released in November 2015. Additional mineralization was discovered
immediately northeast of Gryphon in 2016. Continued drilling during
2016 and 2017 was focused on expanding the mineral resources at
Gryphon and increasing the level of confidence from an inferred to
indicated category. An updated mineral resource estimate for the
Gryphon deposit was announced in January 2018.





Sampling, Analysis and Data Verification





See
“Athabasca Exploration: Sampling, Analysis and Data
Verification” for details.





Mineral Processing and Metallurgical Testing





The results of
the 2016 PEA, as detailed in the Wheeler Technical Report, is based
on the assumption that mill feed from Wheeler River will be trucked
to an existing uranium mill in northern Saskatchewan for processing
under a custom milling agreement. In connection with that,
preliminary process test work was completed for the Phoenix deposit
in 2014, and for the Gryphon deposit in 2015.





The metallurgical
test results indicate the Gryphon and Phoenix deposits are suitable
for processing through the McClean Lake mill. Overall uranium
process recovery has been estimated at 97.0% for Gryphon (due to
lower grade), while Phoenix recovery is estimated at 98.1%. More
details of the test work include:





Gryphon Test Work Result Highlights:





●
 The Gryphon composite sample
contained 3.36% U3O8.


●
 Uraninite is the primary
uranium mineral. It is associated mainly with phyllosilicates/clays
minerals, followed by uraninite‐illite intergrowth, quartz,
tourmaline (dravite) and complex intergrowths.


●
 Acid leaching at grinding
size of P100=300 lm would be effective for extraction of
uranium.


●
 The five leaching tests
showed that 95.4% to 98.8% of uranium can be extracted in 8 hours
and 98.6% to 99.2% in 12 hours, depending on leaching
conditions.


●
 The following leaching
conditions are recommended: Temperature: 50o C, Pressure:
atmospheric, Free Acid: 18.7 g/L, ORP: ≥450 mV, Residence
Time: minimum 8 hours with Fe3+ addition or 12
hours without Fe3+ addition,
Oxidant: 30% hydrogen peroxide, Acid: H2SO4, Pulp Density:
50% solids, Fe3+ addition: 1
g/L.


●
 The acid consumption was 11.3
kg/t ore. With Fe3+ addition of
1g/L, leaching kinetics were enhanced, with 98.4% and 98.8% uranium
extraction in 4 and 8 hours respectively.


●
 Magnafloc 351 can be used to
accelerate the settling of leach residue in the solid/liquid
separation. The settled densities ranged from 37.1% to 44.8%
solids, with highest density achieved under conditions of grinding
size of P100=300 lm and low residual acid strength from
leaching.


●
 Solvent extraction is
effective to selectively extract and purify uranium.


●
 No abnormal challenges are
expected for effluent treatment based on the raffinate
composition.


●
 The total digestion analysis
for the U3O8 sample shows that
high purity U3O8 product can be
produced by stripping with ammonium sulfate‐ammonium hydroxide solution,
yellow cake precipitation with ammonium hydroxide solution followed
by calcination. The calcined U3O8 product meets all
specifications on ASTM C967‐13, “Standard
Specifications for Uranium Ore Concentrate.”








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Phoenix Test Work Result Highlights:





●
 The Phoenix composite sample
contained 19.7% U3O8.


●
 Uraninite is the primary
uranium mineral. It is associated mainly with clay minerals like
illite; with sulfides and iron oxides; and to a lesser extent with
quartz and carbonate minerals.


●
 Over 95% of the uraninite is
exposed in all the size fractions. This indicates a relatively
coarse grind size can be used for leaching.


●
 Leaching tests showed that
over 99.5% uranium can be extracted in 8-12 hours depending on
leaching conditions. The following leaching conditions are
recommended: Temperature: 50o C, Pressure:
atmospheric, Terminal Free Acid: 30 g/L, ORP: ≥450 mV,
Residence Time: 8-12 hours, Oxidant: sodium chlorate or hydrogen
peroxide, Acid: H2SO4, Pulp Density:
50% solids.


●
 The acid consumption in the
preliminary leaching program was 70-75 kg/t ore or 1.6-1.7 kg/ lb
U3O8.


●
 Magnafloc 351 can be used to
accelerate the settling of leach residue solids in the counter
current decantation (CCD) solid/liquid separation.


●
 Solvent extraction (SX) is
effective to selectively extract and purify uranium.


●
 No abnormal challenge is
expected for future effluent treatment based on the raffinate
composition.


●
 The total digestion analysis
of the yellow cake (YC) sample shows that high purity YC product
can be produced through strong acid SX stripping, gypsum
precipitation, and hydrogen peroxide uranium
precipitation.





Mineral Reserve and Mineral Resource Estimates





RPA, an
independent technical consulting firm with relevant experience, was
retained by Denison on behalf of the Wheeler River Joint Venture to
prepare and audit the mineral resource estimates for the Gryphon
and Phoenix deposits in accordance with CIM Definition Standards
(2014) in NI 43-101. The Wheeler Technical Report contains a
combined mineral resource estimate for the Wheeler River project,
with effective dates for the mineral resource estimates for the
Gryphon and Phoenix deposits of January 30, 2018 and May 28, 2014,
respectively. See “Mineral Reserves and Mineral
Resources”, above, for a summary of the combined mineral
resource estimate for the Wheeler River project.





Phoenix Deposit Estimation Methodology





Geology,
structure, and the size and shape of the mineralized zones have
been interpreted using data from 243 diamond drill holes which
resulted in three dimensional wireframe models that represent 0.05%
U3O8 grade envelopes.
The mineralization model consists of a higher grade zone within an
envelope of lower grade material, resulting in two main estimation
domains - higher grade and lower grade. Additionally, a new domain
representing a small zone of structurally controlled basement
mineralization was added at the north end of the
deposit.





Based on 196 dry
bulk density determinations, Denison developed a formula relating
bulk density to uranium grade which was used to assign a density
value to each assay. Bulk density values were used to weight grades
during the resource estimation process and to convert volume to
tonnage.





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Uranium grade
times density (GxD) values and density (D) values were interpolated
into blocks in each domain using an inverse distance squared (ID2)
algorithm. Hard domain boundaries were employed such that drill
hole grades from any given domain could not influence block grades
in any other domain. Very high grade composites were not capped but
grades greater than a designated threshold level for each domain
were subject to restricted search ellipse dimensions in order to
reduce their influence. Block grade was derived from the
interpolated GxD value divided by the interpolated D value for each
block. Block tonnage was based on volume times the interpolated D
value.





The mineral
resource estimate for the Phoenix deposit was classified as
indicated and inferred based on drill hole spacing and apparent
continuity of mineralization. The block models were validated by
comparison of domain wireframe volumes with block volumes, visual
comparison of composite grades with block grades, comparison of
block grades with composite grades used to interpolate grades, and
comparison with estimation by a different method.





Gryphon Deposit Estimation Methodology





The
three-dimensional mineralized wireframes were created by Denison
utilizing Gemcom software following detailed interpretation of the
deposit geology and structure. The wireframes were defined using a
threshold of 0.05% U3O8 and minimum
thickness of two metres. One higher grade domain was defined within
the A1 lenses and three higher grade domains were defined in the D1
lenses based on a threshold of 4.0% U3O8. The wireframes
and drilling database were sent to RPA for grade modelling
following QAQC which included ensuring the wireframes were
‘snapped’ to the drill hole mineralized
intervals.





Based on 279 dry
bulk density determinations, a polynomial formula was determined
relating bulk density to uranium grade which was used to assign a
density value to each assay. Bulk density values were used to
weight grades during the resource estimation process and to convert
volume to tonnage. Uranium grade multiplied by density (GxD) values
and density (D) values were interpolated into blocks measuring 5
metres by 1 metre by 2 metres using an inverse distance squared
(ID2) algorithm since variograms were not considered good enough to
derive kriging parameters. Hard domain boundaries were employed at
the wireframe edges, so that blocks within a given wireframe were
only informed by grade data from that wireframe. For the A1
high-grade domain, assays were capped at 30% U3O8 with a search
restriction applied to composite grades over 20% and for the D1
high-grade domains, assays were capped at 20% U3O8 with no search
restriction. For the A1-A4, B3-B7, C4-C5 and D2-D4 low-grade
domains, assays were capped at 10% U3O8. For the C1
low-grade domain, assays were capped at 20% U3O8 with a search
restriction applied to composite grades over 10%. For the B1, B2,
E1 and E2 low-grade domains, assays were capped at 15%
U3O8
with search restrictions applied to composite grades over 10%
U3O8 for the B1 domain
and 5.0% U3O8 for the E2
domain. For the D1 low-grade domain, assays were capped at 5%
U3O8. Block grade was
derived from the interpolated GxD value divided by the interpolated
D value for each block. Block tonnage was based on volume times the
interpolated D value.





The mineral
resource estimate for the Gryphon deposit was classified according
to the drill hole spacing and the apparent continuity of
mineralization, as either indicated mineral resources (generally,
drill hole spacing of 25 x 25 metres) or inferred mineral resources
(generally, drill hole spacing of 50 x 50 metres). The block models
were validated by comparison of domain wireframe volumes with block
volumes, visual comparison of composite grades with block grades,
comparison of block grades with composite grades used to
interpolate grades, and comparison with estimation by a different
method.








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Mining Operations





Due to the
similarities between the Phoenix and Cigar Lake deposits, for the
purposes of the 2016 PEA the Jet bore system (JBS) mining was
selected for the high grade Phoenix Zones A and B1, similar to the
mining method utilized at the Cigar Lake mine. This methodology
requires a freeze wall to eliminate the potential for ground water
to flow into the mine as well as improve the strength of the host
rock. In the JBS mining method an access drift is established
directly below the mineralization. A pilot hole is drilled up into
the mineralization, equipped with a rotating high pressure water
jet capable of cutting the surrounding mineralization. A slurry of
water and loose broken rock flows by gravity out of the cavity
created, down into a receiving car next to the jet bore machine. At
the Cigar Lake mine, the JBS method has successfully excavated
cavities in the range of 4 to 7 metres in diameter. Mined out
cavities will be filled with concrete that withstands the force of
the water jet when an adjacent cavity is mined. The JBS method
allows for mine operators to carry out their work in a protective
environment to ensure exposure to high grade mineralization is
minimized for all personnel.





The Gryphon
deposit is located in the granitic basement rocks. The ground
conditions are generally good with localized areas of poorer
quality ground typically associated with faulting or other
geological structures. The orebody consists of stacked parallel
lenses dipping at 55 degrees. Extensive geotechnical and
hydrogeological programs have been completed to fully assess the
ground conditions surrounding the deposit. The physical properties
of the orebody and host lead to a selection of conventional
longhole open stoping with backfill as the optimum mining method
for the Gryphon deposit.





Processing and Recovery Operations





The PEA assumes
concurrent processing of Wheeler ores along with 18M lbs / year of
Cigar Lake ores. Currently the McClean mill capacity consists of 18
M lb U3O8/yr milling of
high grade Cigar Lake Phase 1 feed through the #2 leach circuit,
while a notional 4 to 6 M lb U3O8/yr of co-milling
capacity exists in the #1 leach circuit for a total leach capacity
of 22 M lb U3O8/yr.





In order to
co-mill the full tonnage of the Gryphon deposit feed with the Cigar
Lake Phase 1 feed, expansion of the #1 leaching circuit and
solid/liquid separation circuits’ capacities are required.
The McClean Lake #1 leach circuit currently has insufficient
retention capacity to provide the estimated required retention time
for leaching. One or two additional tanks would be required to
augment the existing capacity to efficiently process the Gryphon
deposit feed.





The counter
current decantation (CCD) circuit used for solid-liquid separation
at McClean Lake is anticipated to be a bottleneck in mill
production. A conventional approach to wash poorly settling solids
is pressure filtration. For the PEA base case to reach full Cigar
Lake Phase 1/Gryphon co-milling capacity within the design recovery
rate, two new pressure filters are proposed to supplement the
existing CCD thickener circuit. The proposed solid-liquid
separation operation is as follows:


●
 Cigar Lake leach residue
slurry from the primary thickener underflow feeds to a new
dedicated high grade pressure filter; the washed cake is sent
directly to tailings neutralization.


●
 Gryphon leach residue slurry
is split into coarse and fine fractions using a hydrocyclone, and
then:


o
 the coarse fraction is sent
to the existing CCD thickener circuit (this way, CCD tonnage is
reduced to an acceptable rate and settling performance is improved
at the same time); and





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o
 the fine fraction is sent to
a new low grade pressure filter. The washed cake is sent directly
to tailings neutralization.





To co-mill the
full tonnage of the Phoenix zone feed with the Cigar Lake Phase 2
feed, some minor re-configurations of the slurry receiving,
leaching, and solid/liquid separation circuits are required. After
the pregnant solution is separated from the leached solids residue,
the downstream circuits (clarification, SX, carbon columns,
precipitation, calcining, packaging, crystallization) are assumed
from stated expansion plans to be capable of processing 24 M lb
U3O8/yr.





Infrastructure, Permitting and Compliance Activities





As a remote
northern greenfield site, the Wheeler River project would require
substantial infrastructure to support operations. The site is
located within 6 kilometres of a provincial highway and powerline.
Tie-ins to that infrastructure into site would be required.
Additional surface infrastructure required to be located at the
sites would include:





●
 Production shaft, hoist house
and headframe, and ventilation raise


●
 Main fresh air fans and mine
air heater


●
 Full service
camp


●
 Mine building including
administration offices, change house, maintenance shop, warehouse,
emergency services, laboratories,


●
 Electrical sub-station
supplied by a new overhead power supply line


●
 Back-up diesel power
generators


●
 Water supply and water
treatment plant and ponds


●
 Waste rock storage
facilities


●
 Fuel storage


●
 Backfill plant


●
 Freeze plant


●
 Ore handling
facilities





In terms of
environmental matters, there are no recognized environmental fatal
flaws associated with this project. Similar operations currently
active have shown any environmental concerns can be successfully
mitigated. Preliminary baseline data collection is in progress and
no concerns have been identified. All potential environmental
impacts can be successfully mitigated through the implementation of
industry best practices. The most significant environmental concern
associated with the project will be the management of routine and
non-routine mine water effluent.





From a regulatory
perspective, the project will require completion of a federal and
provincial environmental assessment. This assessment will be
completed as a joint environmental assessment. It is estimated the
assessment will require approximately 24 to 36 months to complete
following the submission of a detailed project description. See
“Government Regulation – Environmental
Assessments” for more information.





Capital and Operating Costs





For the PEA, the
Wheeler River project total capital cost estimate is $1,103 million
including a contingency of 26%. The total capital cost estimate is
split between $560 million of initial capital and $543 million of
sustaining capital.





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Initial
Sustaining
TotalCapital Cost Area
$M
$M
$MOwners
Costs
$25
$0
$25Surface
Infrastructure
$167
$7
$174Mine
$219
$335
$554Plant
Feed Handling & Processing
$18
$60
$78Decommissioning
$0
$40
$40Subtotal
$429
$442
$871Contingency
$131
$101
$232Total Capital ($M)
$560
$543
$1,103





Capital costs are
expressed in 2015 Canadian dollars to a bottom line accuracy of +/-
40%. Initial capital costs are based on the five-year period from
January 1, 2021 through to December 31, 2025. Sustaining capital
costs are for the period from January 1, 2026 through to the end of
2041.





Operating costs
for Wheeler have been factored based on similar
operations.





CAD / lb U3O8Operating Cost Area
Gryphon
PhoenixMining
$3.45
$17.45Surface
Transportation
$1.63
$0.85Processing
$8.03
$6.03Toll
Milling Fee
$2.00
$2.00General
& Administration
$4.17
$3.57Total(1)
$19.28
$29.90





Note:


(1)
 US$14.28 and US$22.15,
respectively, using the PEA exchange rate of 1.35
CAD/USD.





Because of the
long lead time to production (estimated to be 2026 in the PEA), the
PEA considers the following two pricing scenarios, both sourced
from UxC: (1) a Base case scenario using a long-term contract price
of US$44.00 per pound U3O8 as of March 28,
2016; and (2) a Production case price sensitivity using a long-term
contract price of US$62.60 per pound U3O8 for the year 2026
(based on UxC’s Uranium Market Outlook Q1 2016) when the
project production period begins. These prices have been converted
to CAD using an exchange rate of 1.35 CAD / USD based on Bloomberg
long term projections as of February 2016.





The project
economics have been further analyzed on a pre-tax basis (100%
basis) and a Denison specific post-tax basis (60% basis, based on
Denison’s ownership interest as at the PEA date). A summary
of the results is as follows:





Pre-tax (100% basis) economic results:


●
 Internal rate of return
(IRR): Base case = 20.4% / Production Case = 34.1%;


●
 Net present value (NPV) at 8%
discounting: Base case = $513 million / Production case = $1,420
million;


●
 Pay-back period (from the
start of production): Base case = approximately 3 years /
Production case = approximately 18 months; and


●
 The break-even price for the
project is estimated at approximately US$34 per pound U3O8 under the Base
case scenario.








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Denison specific post-tax (60% basis) economic
results:


●
 Internal rate of return
(IRR): Base case = 17.8% / Production Case = 29.2%;
and


●
 Net present value (NPV) at 8%
discounting: Base case = $206 million / Production case = $548
million;





Exploration, Development and Production





Denison expects
to complete a PFS for the Wheeler River property during 2018. The
PFS will be based upon the combined indicated mineral resources for
the project, which includes the Phoenix and Gryphon deposits, as
reflected in the Wheeler Technical Report. Denison has retained
Stantec Consulting Inc. ("Stantec"), ENGCOMP Engineering and
Computing Professionals Inc. ("ENGCOMP") and Hatch Ltd., as leading
engineering and consulting firms, to lead and author the PFS and to
support the Company’s in-house project development team in
the completion of the PFS. The PFS is expected to evaluate
production potential from both the Gryphon and Phoenix deposits
while utilizing Denison’s McClean Lake mill.





The PFS will
evaluate Gryphon production using a conventional longhole mining
program and assess innovative extraction techniques for the Phoenix
deposit. Mineral processing activities are expected to take
advantage of the capacity available at the McClean Lake facility
with limited capital upgrade requirements. With the already
established regional infrastructure (mill, provincial highway,
provincial power line, supply chain, etc.) initial capital costs
are expected to be well below comparables in the industry. If
determined achievable, low capital costs, combined with high grades
and low operating expenses, could lead to an economically robust
project that is able to thrive in difficult market
conditions.





The PFS is
expected to be completed in 2018. Following the completion of the
PFS, the next steps are expected to be the initiation of a formal
Federal and Provincial Environmental Assessment
Process.





With 97% of the
project’s mineral resources classified as indicated mineral
resources, exploration drilling during 2018 will focus on step-outs
along strike of Gryphon and testing of high priority regional
targets. The Gryphon deposit remains open in numerous areas with a
significant amount of potential for future resource growth.
Priority exploration target areas include: (1) Along strike to the
northeast of the E series lenses, where both unconformity and
basement potential exists; (2) Down plunge of the A and B series
lenses; (3) Along strike to the northeast and southwest of the D
series lenses; and (4) Within the currently defined D series
lenses, where additional high-grade shoots may exist.





Very little
regional exploration has taken place on the property in recent
years, with drilling efforts focused on the Phoenix and Gryphon
deposits, which were discovered by Denison in 2008 and 2014
respectively. The property is host to numerous uranium-bearing
lithostructural corridors which are under- or unexplored and have
the potential for additional large, high-grade unconformity or
basement hosted deposits. The 2018 exploration program will see
renewed focus along these corridors to follow-up on previous
mineralized drill results, or to test geophysical targets
identified from recent surveys.








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Waterbury Lake





The Waterbury
Lake property is owned by Denison (64.22%) and Korea Waterbury
Uranium Limited Partnership (“KWULP”) (35.76%), as limited
partners in the Waterbury Lake Uranium Limited Partnership
(“WLULP”) (with
a 0.02% interest held by the Denison and KWULP -owned Waterbury
Lake Uranium Corporation, as general partner of the WLULP),
pursuant to the Waterbury Lake Uranium Limited Partnership
Agreement. Denison is the operator of the project.





Except as
otherwise noted below, this project description is based on the
project’s technical report entitled “Mineral Resource
Estimate On The J Zone Uranium Deposit, Waterbury Lake
Property” dated September 6, 2013 (the “J Zone Technical Report”) by
Allan Armitage, Ph.D., P.Geo.,
and Alan Sexton, M.Sc., P.Geo. of GeoVector Management Inc.
(“GeoVector”), a
copy of which is available on the Company’s website and under
its profile on the SEDAR website at www.sedar.com.





The conclusions,
projections and estimates included in this description are subject
to the qualifications, assumptions and exclusions set out in the
technical report. We recommend you read the technical report in its
entirety to fully understand the project.





Property Description, Location and Access





The Waterbury
Lake property is located in northern Saskatchewan, approximately 12
kilometres north of Points North Landing and 700 kilometres
northeast of Saskatoon, Saskatchewan.





The property can
be accessed year round by provincial highway to Points North, which
is a privately owned service centre with an airstrip and
accommodations available. The nearest community is Wollaston Lake,
57 kilometres directly south east of Points North. The
property’s core camp is accessible year round via 4x4 trail
or ice road during winter across McMahon Lake.





The property is
comprised of 13 contiguous claims and one separate claim covering
40,256 hectares with an annual assessment requirement of $972,905
to maintain title to the mineral claims. Based on previous work
submitted and approved by the province of Saskatchewan, there is
sufficient assessment credits available to keep title on the
property secure until at least 2037, with the separate claim secure
until 2032.





Any uranium
produced from the Waterbury Lake property is subject to uranium
mining royalties in Saskatchewan in accordance with Part III of The
Crown Mineral Royalty Regulations. See "Government Regulation -
Canadian Royalties.” There are no other back-in rights or
royalties with non-owners applicable to this property. Denison has
a 2% net smelter return royalty on the portion of the project that
it does not own.





There are no
known environmental liabilities associated with the Waterbury Lake
property, and there are no other significant factors and risks that
may affect access, title, or the right or ability to perform work
on the property. All the necessary permits for surface exploration
on the property are in place and current.








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Location map of the J Zone and Huskie Zone on the Waterbury Lake
project











History





Strathmore
Minerals Corp. (“Strathmore”) acquired a 100%
interest in the 13 mineral claims located in Saskatchewan in 2004
via staking. During 2007, Strathmore spun out all of their Canadian
assets, including Waterbury’s 13 mineral claims into a new
company, being Fission. In 2008, an earn-in agreement was signed
with the KWULP, whereby Fission granted KWULP the exclusive rights
to earn up to a 50% interest in the Waterbury Lake property by
funding $14,000,000 of expenditures on or before January 30, 2011.
Additionally, Fission retained an overriding royalty interest in
the property of 2% of net smelter returns. On April 29, 2010, KWULP
had fully funded its $14,000,000 of expenditures and consequently
earned a 50% interest in the property.





The earn-in
agreement required that on completion of the earn-in period, the
parties agree to form a jointly controlled limited partnership to
hold the property and on August 16, 2010 the WLULP agreement was
signed, superseding the original earn-in agreement. WLULP was
officially formed December 30, 2010. Fission had 12 months from the
completion of the earn-in agreement during which time it could
acquire an additional 10% interest in WLULP for $6,000,000. On
April 12, 2011, Fission exercised its back-in option by paying
KWULP $6,000,000, bringing Fission’s interest up to
60%.








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The WLULP
agreement required that Fission and its partners spend a total of
$30,000,000 for exploration and evaluation costs over the next
three years, according to their interest in the WLULP. The winter
2013 program completed the budgeted three year exploration program.
Fission was appointed operator for WLULP.





In April 2013
Denison acquired Fission, including Fission's 60% interest in the
Waterbury Lake uranium project. In January 2014, Denison agreed to
allow KWULP to defer its funding obligations to WLULP until
September 30, 2015 and to not be diluted as per the dilution
provisions in the relevant agreements, in exchange for allowing
Denison to authorize spending programs without obtaining the
approval of 75% of the voting interest. On September 30, 2015,
KWULP notified Denison that it elected to dilute its interest in
the Waterbury Lake project and that it would not fund its deferred
funding obligation to WLULP. As a result, Denison earned an
additional 1.55% interest in the Waterbury Lake project. In
December 2016, Denison and KWULP further agreed to allow Denison to
continue to authorize spending programs up to an aggregate amount
of $10,000,000 (the “Discretionary Amount”) until
September 30, 2017 without obtaining the approval of 75% of the
voting interest and that KWULP would not fund its pro rata portion
of such spending. By the end of 2016, the agreement with KWULP had
resulted in Denison earning a further 1.46% interest, bringing
Denison’s interest in the project to 63.01%. By the end of
2017, the agreement with KWULP had resulted in Denison earning a
further 1.21% interest in the project to 64.22%. Again, in January
2018, Denison and KWULP further agreed to allow Denison to
authorize spending programs, and increased the aggregate
Discretionary Amount to $15,000,000.





Uranium
exploration has been undertaken on the Waterbury Lake property for
over 40 years. Numerous and varied programs have been carried out
on different portions of the property, including diamond drill
campaigns, airborne and ground geophysics, boulder sampling and
prospecting. Airborne radiometric, magnetic and electromagnetic
(EM) surveys as well as a hydrogeochemical survey were conducted on
Waterbury Lake as early as 1969. Cogema Resources Inc. (now Orano
Canada) acquired properties in the Waterbury and Henday Lake areas
during the late 1980s and carried out an extensive exploration
program involving geological mapping, sampling, drilling and
geophysical surveys. The latter included airborne EM and magnetic
surveys, and ground VLF-EM and gravity surveys.





Following-up on
work done by Orano Canada up until the early 1990s, Cameco acquired
properties in the Waterbury and McMahon Lakes area and initially
completed geological mapping and sampling programs. This was
followed by more geophysical surveys including ground time domain
electromagnetic (TDEM), magnetic, gravity and induced polarization
(IP) over select targets and drilling throughout the
decade.





In 2004,
Strathmore acquired the Waterbury Lake property through the staking
of 13 mineral claims. During the spring of 2005, an airborne high
power time domain electromagnetic (MEGATEM II) survey was completed
over the entire property. A total of 1,749 line kilometres were
flown. Other work during 2005 included a heli-borne EM survey flown
in the spring and a small boulder sampling program in the fall.
Strathmore continued work on the property during 2006 with a ground
EM geophysical survey and completing eight drill holes totaling
2,865 metres. In addition, an IP-resistivity survey was competed.
This was followed by more ground geophysical surveys in early 2007.
In June 2007, the Waterbury Lake property was spun out of
Strathmore and into Fission.





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Late in 2007,
Fission funded the drilling of eight diamond drill holes totaling
2,222 metres. In early 2008, five drill holes totaling 1,303 metres
were completed and a 594 line-kilometre VTEM airborne magnetic and
EM survey was flown. Following this work, soil sampling, ground and
airborne geophysical surveys and a 19-hole drilling program (7,996
metres) were completed between May and August. In 2009, two
drilling programs were carried out totalling 10,082 metres in 29
holes. Two diamond drilling programs were completed on the property
during 2010. The first was carried out between mid-January and end
of March, 2010. During this period 35 diamond drill holes were
completed for a total accumulated length (including restarts) of
11,250 metres. Several geophysical surveys were also completed
during the first three months of the year. A second diamond
drilling program was conducted between mid-July to early September.
During this period, 16 holes were completed for a total accumulated
length (including restarts) of 5,172 metres. Airborne radiometric
anomalies delineated from the previous summer were checked in the
field during August and early September, and a bathymetry survey of
the Discovery Bay/Talisker area was carried out in early October. A
winter 2011 drilling program was carried out between early January
and mid-April, 2011. Three diamond drill rigs completed a total of
82 holes for a total accumulated length (including restarts) of
26,300 metres. Between January and June 2011, several geophysical
surveys were conducted on the Waterbury property. These included
26.4 kilometres of time domain EM survey at Discovery Bay
Extension, 25.6 kilometres of time domain EM at Oban and Oban North
grids, and 64 kilometres of IP Resistivity and 32.15 kilometres of
time domain EM surveys at Murphy-Glen grid. Two drilling programs
were completed on the property in 2012 totalling approximately
39,320 metres of core, including 75 holes on the J Zone. A total of
86 holes (31,590 metres) were drilled during the winter drilling
program including 49 holes in and around the J Zone. Twenty-six
drill holes totaling 7,730 metres were completed in the J Zone area
in a summer 2012 drilling program. A total of 68 drill holes and 11
restarts were completed in 2013 comprising 21,013 metres. All of
the winter 2013 drilling was completed in the immediate area of the
J Zone deposit to extend the boundaries of the mineralization and
infill gaps in the drill pattern.





Geological Setting, Mineralization and Deposit Types





The Waterbury
property is located in the eastern portion of the Proterozoic
Athabasca Basin. The Athabasca sediments unconformably overlie
older crystalline basement complexes of the highly prospective
Mudjatik – Wollaston Transition Zone (“MWTZ”). The MWTZ marks a
gradational contact between bands of Paleoproterozoic metasediments
and Archean granitic gneisses of the Mudjatik domain to the west
and variably graphitic Paleoproterozoic metasediments and Archean
granitic gneisses of the Wollaston domain to the east. The MWTZ
currently hosts all producing uranium deposits in the Athabasca
Basin including McArthur River and Cigar Lake.





The Athabasca
basin in the project area is comprised of several hundred metres of
Manitou Falls Formation fluvial, quartz rich conglomeratic
sandstone. Basement rocks in the area are dominated by Archean
orthogneisses, occurring as large domes, and steeply dipping,
locally graphitic, Paleoproterozoic metasedimentary paragneisses to
granofels. Directly below the Athabasca/basement unconformity is a
zone of paleoregolith which commonly extends for many metres into
the basement. The paleoweathered zone typically grades with depth
from pervasive hematization into pervasive chloritization and
finally into fresh rock. The unconformity surface is relatively
flat on a large scale but in the Discovery Bay area local reverse
faulting down drops the unconformity to the
south-east.





The Athabasca
Basin sedimentary rocks which overlie the Waterbury Lake project
area typically range in thickness from 195 to 300 metres. The upper
portion of the sedimentary package is comprised of the Manitou
Falls Collins (MFc) Formation pebbly quartz arenite which grades
into Manitou Falls Bird (MFb) Formation pebble bedded quartz
arenite at approximately 80 metres depth.





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An easily
recognizable 5 to 7 metres marker conglomerate exists in the MFb
sandstone, and a basal conglomerate unit is almost always present
directly above the unconformity. In the deposit area, the
underlying basement geology is interpreted to be a steeply
north-northwest dipping, east-west trending corridor of variably
graphitic Wollaston Group metasedimentary gneisses, bounded to the
north and south by thick zones of predominantly granitic Archean
orthogneiss. The Archean orthogneisses apparently define two large
dome structures identified as the north and south side orthogneiss
domes. The stratigraphy of the metasedimentary corridor is
dominantly comprised of: weakly graphitic cordierite-almandine
pelitic gneiss, informally termed the ‘typical J Zone pelitic
gneiss’; graphite-sulphide rich pelitic gneiss;
cordierite-almandine augen gneiss; and thin lenses of garnetite
which appear to be more abundant along the southern edge of the
corridor. A thick unit of strongly graphitic cataclasite exists
within the graphite-sulphide pelitic gneiss.





J Zone





The J Zone
uranium deposit was discovered during the winter 2010 drilling
program at Waterbury Lake and can be classified as an
unconformity-related deposit of the unconformity-hosted variety.
The second drill hole of the campaign, WAT10-063A, was an angled
hole drilled from a peninsula extending into McMahon Lake. It
intersected 10.5 metres of uranium mineralization grading 1.91%
U3O8 including 1.0
metres grading 13.87% U3O8 as well as an
additional four metres grading at 0.16% U3O8.





The J Zone
deposit is currently defined by 268 drill holes intersecting
uranium mineralization over a combined east-west strike length of
up to 700 metres and a maximum north-south lateral width of 70
metres. The deposit trends roughly east-west (80°) in line
with the metasedimentary corridor and cataclastic graphitic fault
zone.





Mineralization
thickness varies widely throughout the J Zone and can range from
tens of centimetres to over 19.5 metres in vertical thickness. In
cross section J Zone mineralization is roughly lens shaped with a
relatively thick central zone that corresponds with the interpreted
location of the cataclasite and rapidly tapers out to the north and
south. Locally, a particularly high grade (upwards of 40%
U3O8) but often thin
lens of mineralization is present along the southern boundary of
the metasedimentary corridor. Ten metre step out drill holes to the
south from these high grade holes have failed to intersect any
mineralization, demonstrating the extremely discreet nature of
mineralization.





Uranium
mineralization is generally found within several metres of the
unconformity at depth ranges of 195 to 230 metres below surface. It
variably occurs entirely hosted within the Athabasca sandstones,
entirely within the basement metasedimentary gneisses or straddling
the unconformity between them. A semi-continuous, thin zone of
uranium mineralization has been intersected in occasional southern
J Zone drill holes well below the main mineralized zone, separated
by several metres of barren metasedimentary gneiss. This
mineralized zone is informally termed the south-side lens and can
host grades up to 3.70% U3O8.





Huskie Zone





The Huskie Zone
was discovered during the summer 2017 drilling program at Waterbury
Lake and can be classified as an unconformity-related deposit of
the basement-hosted variety. The Huskie Zone is located
approximately 1.5 kilometres to the northeast of the
property’s J Zone uranium deposit. The mineralized zone
occurs between 50 and 175 metres vertically below the sub-Athabasca
unconformity (265 and 390 metres vertically below surface) and
measures approximately 100 metres along strike (extent of 2017
drilling), up to 120 metres along dip, with individual lenses
varying in interpreted true thickness between approximately 2 and 7
metres.





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The mineralized
zone is hosted primarily within a faulted, graphite-bearing pelitic
gneiss (“graphitic gneiss”) which forms part of an
east-west striking, northerly dipping package of metasedimentary
rocks flanked to the north and south by granitic gneisses. The
Athabasca Group sandstones that unconformably overly the basement
rocks are approximately 210 metres thick. A major reverse fault,
occurring along the upper contact of the graphitic gneiss, has
resulted in approximately 15 metres of offset of the sub-Athabasca
unconformity. Preliminary interpretation indicates the
mineralization occurs as parallel, stacked lenses which are
conformable to the foliation and fault planes within the graphitic
gneiss. The high-grade mineralization is comprised of massive to
semi-massive uraninite (pitchblende) and subordinate bright yellow
secondary uranium minerals occurring along fault or fracture
planes, or as replacement along foliation planes. Disseminations of
lower grade mineralization occur within highly altered rocks
proximal to fault planes. The mineralization is intimately
associated with hematite, which both occur central to a broad and
pervasive alteration envelope of white clays, chlorite and
silicification.





Exploration





Since Denison
acquired the property in April 2013 four resistivity surveys (298
line kilometres) have been completed, comprised of surveys over the
Discovery Bay (J Zone), Oban and Hamilton Lake areas. These surveys
augment existing magnetic, electromagnetic, resistivity and gravity
surveys for the property. The resistivity surveying conducted by
Denison have led to the definition of numerous drill targets, a
large portion of which have been subsequently tested.





Drilling





Since Denison
acquired the property in April 2013, drilling has largely focused
on testing resistivity targets in the Discovery Bay Extension (12
holes, 3963.3 metres), Oban (18 holes, 6197.5 metres), Hamilton
Lake (12 holes, 5879.8 metres) and Arran (3 holes, 888 metres)
target areas. Highlights have included the discovery of weak
unconformity-hosted mineralization at Oban and Hamilton Lake. These
target areas have untested targets that warrant
follow-up.





Oban





The Oban area is
a prospective east-west lithostructural trend located approximately
3 kilometres north of the J Zone deposit. Resistivity surveying has
identified a broad zone of low basement resistivity with two
sub-parallel trends roughly coincident with previously identified
electromagnetic conductors. Weak mineralization was intersected at
the sub-Athabasca unconformity during 2014 in drill holes
WAT14-406A (0.08% U3O8 over 4.8 metres)
and WAT14-407 (0.05% U3O8 over 1.5 metres).
Follow-up drilling during 2015 confirmed favorable exploration
criteria along the trend including alteration and structure in the
sandstone and graphitic basement rocks. WAT15-419, drilled 150
metres east along strike of WAT14-406A and WAT14-407, intersected a
mineralized fracture 50 metres above the unconformity that
contained 788 ppm U over 0.5 metres. WAT15-425 followed up this
fracture at the unconformity and intersected multiple, metre-scale
zones of weak uranium mineralization. Samples through these zones
contained up to 0.267% U3O8 over 0.5 metres.
Further drilling in 2016 focused along strike to the east where
resistivity coverage had been expanded. The drill holes confimed
extension of the trend to the east, including strong alteration and
structure in the sandstone and graphitic basement rocks, but did
not intersect any significant mineralization. In light of the
basement-hosted discovery at the Huskie Zone the Oban trend
warrants further review to evaluate the basement potential in
detail.








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Hamilton Lake





The Hamilton Lake
area is a relatively large and under-explored area on the western
flank of the Midwest Dome, which shows prospective airborne
magnetic and electromagnetic trends, but has not been subject to
adequate ground geophysical surveying and follow-up drill testing.
Limited historical drilling at Hamilton Lake intersected graphitic
metasediments, structure, alteration, and elevated sandstone
geochemistry. The DCIP resistivity survey completed by Denison in
2016 over the southern portion of the Hamilton Lake area showed a
significant north-south, linear, low resistivity trend with some
associated low resistivity ‘breaches’ in the sandstone
that could be indicative of alteration chimneys associated with
uranium mineralization. An initial drill program completed during
2016, which included a fence of two drill holes, identified
features associated with unconformity-related uranium deposits,
including highly altered and structured sandstone and graphitic
basement rocks, an unconformity offset, and anomalous geochemistry,
including 8.3 ppm U over the basal 25 metres of sandstone and 0.5
metre intervals of 389 ppm and 299 ppm U immediately above the
unconformity. These results confirmed the trend, termed the
‘Hamilton Lake trend’, as a high priority target with
an interpreted minimum strike length of 4.5 kilometres to the south
and 9.0 kilometres to the north of the two holes completed in
2016.





During the winter
2017 program, nine drill holes totaling 4,803 metres were completed
on the Hamilton Lake trend. Seven of these holes were drilled along
strike, to the north and south, of the 2016 drilling results to
test targets at the unconformity. A total of 1.8 kilometres of
strike length was evaluated at a reconnaissance scale with holes,
drilled as single holes or fences, spaced 300 or 600 metres apart
along strike. The results confirmed strike continuity of a
significant graphitic fault zone in the basement rocks with
associated structured and altered overlying sandstone. Drill-hole
WAT17-438, which optimally intersected the basement graphitic fault
zone at the unconformity, intersected weak mineralization
immediately above the unconformity, including 0.23% and 0.04%
U3O8 over 0.5 metre
intervals. The mineralization was associated with a fairly
significant sandstone alteration plume. Two additional holes were
drilled to test ‘resistivity low’ trends to the east of
the Hamilton Lake trend. The holes did not intersect favorable
geological features associated with unconformity-related uranium
thereby confirming the Hamilton Lake trend as the principle target
horizon.





Further drilling
is warranted along the extensive Hamilton Lake trend, along strike
of the 2017 drilling, to test the basement graphitic fault zone at
the unconformity and related high priority ‘resistivity
low’ targets.





Huskie Zone





During the summer
2017 drilling program at Waterbury Lake, Denison discovered
high-grade, basement-hosted mineralization, located approximately
1.5 kilometres to the northeast of the property’s J Zone
uranium deposit. The new zone of mineralization has been named the
“Huskie” zone. The summer program included a total of
nine drill holes totaling 3,722 metres. Of the eight drill holes
designed to test for basement-hosted mineralization, seven holes
intersected significant mineralization – including high-grade
intersections in four of the holes. A single hole was designed to
test for unconformity mineralization and encountered bleaching,
silicification, clay alteration and weak radioactivity in the lower
sandstone, proximal to a 15 metre unconformity offset which
suggests additional potential at the unconformity. This initial
drilling campaign, completed on an approximate 50 x 50 metre
spacing, has allowed for the wide-spaced definition of a zone of
entirely basement-hosted mineralization with geological features
consistent with basement-hosted deposits in the Athabasca Basin.
Highlight assay results from the summer 2017 drilling program
included:





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● 9.1%
U3O8 over 3.7 metres;
including 16.8% U3O8 over 2.0 metres
in drill hole WAT17-446A


● 1.7%
U3O8 over 7.5 metres;
including 8.2% U3O8 over 1.5 metres
in drill hole WAT17-449


● 1.5%
U3O8 over 4.5 metres;
including 3.9% U3O8 over 1.0 metre in
drill hole WAT17-450A





Sampling, Analysis and Data Verification





For the
exploration and drilling work being completed by Denison since
April 2013, Denison has followed the sampling, analysis and data
verification procedures as outlined in the section “Athabasca
Exploration: Sampling, Analysis And Data
Verification”.





The sampling,
analysis and data verification for the J Zone mineral resource
estimate is comprehensively described in the J Zone Technical
Report. A summary of those procedures are provided as
follows:





Drill core was
split once geological logging, sample mark up and photographing
were completed. All drill core samples were marked out and split at
the splitting shack by Fission employees, put into 5-gallon sample
pails and sealed and transported to Points North, Saskatchewan only
prior to shipment. The samples were then transported directly to
the Saskatchewan Research Council Geoanalytical laboratories (the
“SRC Lab”) in
Saskatoon Saskatchewan by Marsh Expediting. All assay and bulk
density samples were split using a manual core splitter over the
intervals noted in the sample booklet. Half of the core was placed
in a plastic sample bag with the sample tag and taped closed with
fibre tape. The other half of the core was returned to the core box
in its original orientation for future reference. All drill core
samples were evenly and symmetrically split in half in order to try
and obtain the most representative sample possible. Mineralized
core samples which occur in drill runs with less than 80% core
recovery are flagged for review prior to the resource estimation
process. Recovery through the mineralized zone is generally good
however and assay samples are assumed to adequately represent in
situ uranium content. The SRC Lab offers an ISO/IEC 17025:2005
accredited method for the determination of U3O8 weight % in
geological samples. Rock samples are crushed to 60 % at -2 mm and a
100-200g sub sample is split out using a riffler. The sub sample is
further crushed to 90% at -106 microns using a standard puck and
ring grinding mill. An aliquot of pulp is digested in a
concentrated mixture of HNO3:HCl in a hot water bath for an hour
before being diluted by deionised water. Samples are then analysed
by a Perkin Elmer ICP-OES instrument (models DV4300 or
DV5300).





Drill core
samples collected for bulk density measurements were first weighed
as they are received and then submerged in deionised water and
re-weighed. The samples are then dried until a constant weight is
obtained. The sample is then coated with an impermeable layer of
wax and weighed again while submersed in deionized water. Weights
are entered into a database and the bulk density of the core waxed
and un-waxed (immersion method) is calculated and recorded. Not all
density samples had both density measurements recorded. Water
temperature at the time of weighing is also recorded and used in
the bulk density calculation. The detection limit for bulk density
measurements by this method is 0.01 g/cm3.





Prior to the
summer 2010 drill program, the only QA/QC procedures implemented on
drill core samples from the project were those performed internally
by SRC Lab. The in-house SRC Lab QA/QC procedures involve inserting
one to two quality control samples of known value with each new
batch of 40 geochemical samples. All of the reference materials
used by the SRC Lab on the Waterbury project are certified and
provided by CANMET Mining and Mineral Services. The SRC Lab
internal QA/QC program continued through the 2013 drill program.
Starting in the summer of 2010 and continuing into the 2013 drill
program (discontinued after DDH WAT13-350), an internal QA/QC
program was designed by Fission to independently provide confidence
in the core sample geochemical results provided by the SRC
Lab.





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The internal
QA/QC sampling program determines analytical precision through the
insertion of sample duplicates, accuracy through the insertion of
materials of “known” composition (reference material)
and checks for contamination by insertion of blanks. Blanks,
reference standards and duplicates were inserted into the sample
sequence including field duplicates (quarter core every 1 in 20
samples), prep and pulp duplicates (inserted by the SRC Lab every 1
in 20 samples) and blank samples (1 sample for every mineralized
drill hole). Beginning in 2012 certified, internal reference
standards were used in all holes drilled at Waterbury Lake,
replacing the re-analysed low, medium and high grade reference
samples. The results of the QA/QC programs indicate there are no
issues with the drill core assay data. The data verification
programs undertaken on the data collected from the Project support
the geological interpretations, and the analytical and database
quality, and therefore the data can support mineral resource
estimation.





Mineral Processing and Metallurgical Testing





A preliminary
assessment of the mineralogical and leaching characteristics of a
representative selection of drill core samples from the J Zone was
undertaken between July and December 2011 by Mineral Services
Canada (“MSC”).





The study was
based on a suite of 48 samples of mineralized material collected
from thirty-two drill holes (2010 and 2011 programs). These were
chosen to provide good spatial representation of the J Zone
mineralization as well as representing a wide range of uranium
content. The samples were derived from the half split core
remaining after the initial geochemical / assay sampling process.
All samples were submitted to the SRC Lab for comprehensive
mineralogical analysis and preparation of thin sections for
petrographic analysis. The results of mineralogical work were used,
in conjunction with spatial considerations, to define suitable
composite samples for preliminary leaching test work undertaken by
the Saskatchewan Research Council (“SRC”) Mining and Minerals
Division.





Mineralogical
analysis, utilizing XRD, quantitative mineralogical analysis
(Q-Min), petrography and SEM-EDS analysis, determined that the most
abundant uranium-bearing minerals in the J Zone are uraninite
and/or pitchblende, and coffinite. The gangue mineralogy is
essentially comprised of various amounts of quartz, phyllosilicates
(illite-sericite, chlorite, biotite, kaolinite) and (Fe, Ti)-oxides
(hematite, goethite and anatase). Feldspars also occur in most
samples and carbonates as well as a variety of sulphides are
locally present. Ni-arsenides are recognized throughout the samples
as well. The results of the mineralogical analyses identified five
groupings of samples with ore mineralogies typically dominated by
either uranium oxide or uranium silicate phases.





Preliminary acid
leaching tests were undertaken by SRC Mining and Minerals Division
on composite samples prepared from the sample set. Only the
leaching time and rate of acid addition were considered in the
tests while the other parameters (e.g. solid percentage in the
slurry, temperature, pressure and agitation conditions) remained
fixed. A total of five composite samples were defined based on
spatial location, lithology, uranium grades and mineralogy. Acid
leaching (H2SO4) was performed on
each of the composite samples for 12 hours under atmospheric
pressure and at a temperature of 55-65°C. Agitation was used
to create adequate turbulence. Sodium Chlorate was used as the
oxidant. The tests were undertaken on the assay lab rejects from
XRD analyses that were ground to 90% passing 106 microns. The
percentage of solids in the slurry was set at 50%. The only
variables were the acid addition and leaching residence time. Two
different H2SO4 dosages were used
to create an initial leaching environment with 25 mSc/cm and 55
mSc/cm, respectively. Each composite sample was split into two
subsamples labelled A and B.





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The A sample was
used to test high acid addition with high initial conductivity and
the B sample was used to test low acid addition with low initial
conductivity. The preliminary acid leaching tests showed that
maximum extraction rates of 97.6 % to 98.5 % U3O8 can be obtained
(depending on the acid addition) within 4 to 8 hours of leaching
time, and that the leaching efficiency was variably affected by
acid addition and leaching time.





A more
comprehensive phase of metallurgical test work has been recommended
to optimize the leaching efficiency as well as to evaluate other
parameters of the leaching process (grinding size of the ore, solid
percentage in the slurry, temperature, pressure, and residence time
and agitation conditions).





Mineral Resource Estimates





The Company
retained GeoVector to independently review and audit mineral
resource estimates for the Waterbury Lake property, in accordance
with the requirements of NI 43-101, and in 2013 GeoVector prepared
the J Zone Technical Report. See “Mineral Reserves and
Mineral Resources”, above, for a summary of the mineral
resource estimate for the Waterbury Lake project.





For the 2013
mineral resource estimate, a 3D wireframe model was constructed
based generally on a cut-off grade of 0.03 to 0.05 % U3O8 which involved
visually interpreting mineralized zones from cross sections using
histograms of U3O8. 3D rings of
mineralized intersections were created on each cross section and
these were tied together to create a continuous wireframe solid
model in Gemcom GEMS 6.5 software. The modeling exercise provided
broad controls on the size and shape of the mineralized
volume.





Based on a
statistical analysis of the composite database, no capping was
applied on the composite populations to limit high values for
uranium. A histogram of the data indicates a log normal
distribution of the metals with very few outliers within the
database. Analysis of the spatial location of outlier samples and
the sample values proximal to them led GeoVector to believe that
the high values were legitimate parts of the population and that
the impact of including these high composite values uncut would be
negligible to the overall resource estimate.





Using waxed core
and dry bulk density determinations a formula was derived relating
bulk density to grade and was used to assign a density value to
each assay. Bulk density values were used to weight grades during
the resource estimation process and to convert volume to
tonnage.





Uranium grade
times density (GxD) values and density (D) values were interpolated
into the block model using an inverse distance squared (ID2)
algorithm. Block grade was derived from the interpolated GxD value
divided by the interpolated D value for each block. Block tonnage
was based on volume times the interpolated D value.





Two passes were
used to interpolate all of the blocks in the wireframe, but 99% of
the blocks were filled by the first pass. The size of the search
ellipse, in the X, Y, and Z direction, used to interpolate grade
into the resource blocks is based on 3D semi-variography analysis
(completed in GEMS) of mineralized points within the resource
model. For the first pass, the search ellipse was set at 25 x 15 x
15 metres in the X, Y, Z direction respectively. The Principal
azimuth is oriented at 075o, the Principal dip is oriented at
0° and the Intermediate azimuth is oriented at 0°. For
the second pass, the search ellipse was set at 50 x 30 x 30 metres
in the X, Y, Z direction respectively. The Principal azimuth is
oriented at 075o, the Principal dip is oriented at 0° and
the Intermediate azimuth is oriented at 0°.





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The mineral
resources for the J Zone were classified as indicated based on
drill hole spacing and continuity of mineralization. The block
model was validated by visual and statistical comparisons of
composite grades and block grades.





Exploration, Development and Production





The
Company’s 2018 exploration program is designed to test for
extensions to the Huskie zone mineralization through step-out
drilling. A diamond drilling program of approximately 14,400 metres
in 36 drill holes is planned for 2018 and is expected to be carried
out during the winter and summer drilling seasons. No development
or production is currently planned for the project.


























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McClean Lake





The McClean Lake
projects are owned by Denison (22.5%) and its joint venture
partners, Orano Canada (70.0%) and OURD (7.5%). Orano Canada is the
operator/manager of the projects.





Except as
otherwise noted below, the project descriptions are based on the
Company’s technical reports: (A) the “Technical Report
on the Denison Mines Inc. Uranium Properties, Saskatchewan,
Canada” dated November 21, 2005, as revised February 16, 2006
(the “McClean Technical
Report”), (B) the “Technical Report on the Sue D
Uranium Deposit Mineral Resource Estimate, Saskatchewan,
Canada” dated March 31, 2006 (the “Sue D Report”), and (C) the
"Technical Report on the McClean North Uranium Deposit Mineral
Resource Estimate, Saskatchewan, Canada" dated January 31, 2007
(the "McClean North Technical
Report"), copies of which are available on the
Company’s
profile on the SEDAR website at www.sedar.com. Scott Wilson RPA
(now Roscoe Postle Associates Inc.) was engaged to prepare and
deliver the McClean Technical Report (authored by Richard E.
Routledge, M.Sc., P. Geo.), the Sue D Report and the McClean North
Technical Report (each authored by Richard E. Routledge, M.Sc., P.
Geo. and James W. Hendry, P. Eng.). Each author was an independent
Qualified Persons for the purposes of NI 43-101. By letter dated
October 20, 2009, Orano Canada received from Scott Wilson RPA
subsequent corrections to the resource estimate in the McClean
North Technical Report, which revisions have been incorporated
herein as applicable.





The conclusions,
projections and estimates included in this description are subject
to the qualifications, assumptions and exclusions set out in the
technical reports. We recommend you read the technical reports in
their entirety to fully understand the project.





Property Description, Location and Access





The McClean Lake
property is located within the eastern part of the Athabasca Basin
in northern Saskatchewan, approximately 26 kilometres west of the
Rabbit Lake mine and approximately 750 kilometres north of
Saskatoon.





Access to the
McClean Lake site is by both road and air. Goods are transported to
the site by truck over an all–weather road connecting with
the provincial highway system. Air transportation is provided
through the Points North airstrip about 25 kilometres from the
project site.





The mineral
property consists of four (4) mineral leases covering an area of
1,147 hectares and 13 mineral claims covering an area of 3,111
hectares. The right to mine the McClean Lake deposits was acquired
under these mineral leases, as renewed from time to time. Mineral
leases are for terms of 10 years with the right to renew for
successive 10-year periods provided that the leaseholders are not
in default of the terms of the lease. A mineral claim grants the
holder the right to explore for minerals within the claim lands and
the right to apply for a mineral lease. The current mineral leases
have terms that expire between November 2025 and August 2026 and
title to the mineral claims is secure until at least 2036. It is
expected that the leases will be renewed in the normal course, as
required, to enable all the McClean Lake deposits to be fully
exploited.





The right to use
and occupy the lands at McClean Lake has been granted in a surface
lease agreement with the province of Saskatchewan. The McClean
surface lease was entered into in 2002, has a term until 2035 (33
years) and covers a land area of approximately 3,677
hectares.





The uranium
produced from the McClean Lake deposits is subject to uranium
mining royalties in Saskatchewan in accordance with Part III of The
Crown Mineral Royalty Regulations. See "Government Regulation -
Canadian Royalties.” In addition, a royalty of 2% of the spot
market price on all U3O8 produced from the
Sue E deposit is payable to the previous owner of a portion of the
deposit.





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History





Several operators
and related joint ventures have managed the McClean Lake project
from 1968 to present. Their involvement has resulted in the
discovery of several uranium deposits including the McClean North,
McClean South, JEB, Sue trend (A,B,C,D,E), and Caribou. Exploration
activities over the project have involved extensive geophysical
surveys, both airborne and ground, in addition to
exploration/delineation diamond drilling.





Uranium
production from the McClean Lake deposits at the onsite McClean
mill facility to date (current to 2017) is approximately 50 million
pounds U3O8. The ore feed for
production is almost entirely sourced from mining activities of the
Sue (A, B, C, and E) and JEB deposits.





1968 – 1974 (Gulf Minerals Canada Ltd.)





From 1968 to
1974, the entire area was held under permit (Permit #8) by Gulf
Minerals Canada Ltd. During this period, Gulf flew an airborne
radiometric survey over the area and conducted reconnaissance and
ground level surveys.





1974 – 1985 (Canadian Occidental Petroleum Ltd)





In 1974 Gulf
reduced their land holding and allowed Permit #8 to lapse. Canadian
Occidental Petroleum Ltd. (CanOxy) acquired the ground and flew a
reconnaissance survey over the area in July of that same year and
preceded to stake a 260 square kilometre area called then the Wolly
property (now divided into the McClean Lake and Wolly properties).
CanOxy operated the project from 1974 to 1985 at first without
partners, then in 1977, in partnership with Inco Ltd. The agreement
allowed Inco Ltd. to earn a 50% interest in the property by January
1980.





Initial
exploration consisted of geochemical and ground radiometric
prospecting with follow up drilling. Several geophysical methods
were also used, but correlation with geochemical and radiometric
anomalies was generally poor. In 1977, airborne magnetic and EM
surveys were flown over the property. The results indicated
conductive trends and helped to better define the regional basement
structure and lithology. The first significant discovery came in
1978, when the Tent Lake zone was found along a major conductive
trend. Following this discovery, the emphasis was on geophysical
rather than geochemical or radiometric targets. From 1979 to 1985,
several major discoveries were made based mainly on geophysics and
improved geological interpretations. This included the McClean
North deposit in 1979, the McClean South deposit in 1980, the Candy
Lake zone in 1981 and the JEB deposit in 1982. During this period,
CanOxy completed 781 drill holes for 118,540 metres of drilling;
most of them concentrated in the area now known as the McClean Lake
property.





1985 – 1993 (Minatco / Denison Mines / OURD)





In January 1985,
Minatco entered into a joint venture agreement with CanOxy and Inco
to become the operator of the project. Geophysical and drilling
programs were conducted throughout the project area to follow up
existing mineralized areas, and explore new zones. In 1987, an
additional zone (Pod 5) was found in McClean North. Several very
significant discoveries were also made the following year, in 1988:
two new mineralized zones, Sue A and B were found in the Sue area,
which would lead to the discovery of the highly productive Sue
trend; mineralization was indicated on the McClean South conductor,
west of the McClean Southwest pod; and additional mineralization
was found in McClean North.





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Additional work
in the Sue area over the next few years, led to the Sue C deposits
in 1989, the Sue D deposit in 1990 and the Sue E deposit in 1991.
From 1985 to 1993, Minatco completed 1,160 drill holes for a total
of 171,090 metres of drilling on the Wolly and McClean Lake
projects, most of them concentrated again in the area now known as
the McClean Lake property. In 1990, the CanOxy-Inco JV sold out to
Minatco.





In 1993, Denison
Mines Ltd. exchanged with Minatco a 70% interest in the Midwest
Lake project for a 22.5% interest in the McClean Lake project. OURD
Canada Ltd., a Denison partner, also obtained a 7.5% interest in
McClean. Also in 1993, Orano Canada (formerly Cogema Resources
Inc.) acquired the uranium assets of TOTAL (Minatco in Canada) and
became the operator of the McClean Lake Project.





In 1993, the
joint venture planned to proceed with mine development. The McClean
Lake property was created, and defined as a portion of the Wolly
property outlined by a surface lease (containing the JEB, Sue and
McClean deposits).





Geological Setting, Mineralization and Deposit Types





The McClean Lake
uranium deposits lie near the eastern margin of the Athabasca Basin
in the Churchill Structural Province of the Canadian Shield. The
bedrock geology of the area consists of Precambrian gneisses
unconformably overlain by flat lying, unmetamorphosed sandstones
and conglomerates of the Athabasca Group. The Precambrian basement
complex is composed of an overlying Aphebian aged supracrustal
metasedimentary unit infolded into the older Archean gneisses. The
younger Helikian aged, Athabasca sandstone was deposited onto this
basement complex. The basement surface is marked by a
paleoweathered zone with lateritic characteristics referred to as
regolith.





The McClean Lake
uranium deposits which include the Sue deposits (A to E), McClean
deposits (North and South), Caribou deposit and JEB deposit are
unconformity-related deposits of the unconformity-hosted
variety.





Exploration and Drilling





Exploration
activities including ground geophysics and diamond drilling were
conducted by Orano Canada from 1994 to present. The majority of
exploration has been focused on areas of known mineralization at
McClean North/South, Sue Trend, JEB and the Tent Seal Trend. Other
target areas on the property which have also been subject to ground
geophysics and drilling include Candy Lake, Bena, Vulture and
Moffat Lake. In 2002 the discovery of Caribou, the high- grade
unconformity related uranium deposit was made approximately 2
kilometres northwest of the Sue C open pit. No other significant
discoveries have been made since 2002. During the period 1994 to
2017 Orano Canada completed 95,933 metres of drilling in 496
holes.





Sampling, Analysis and Data Verification





The following
description applies to all exploration on the McClean Lake
property.





Following the
completion of a drill hole, the hole is radiometrically logged
using a downhole slim-line gamma probe. The gamma-log results
provide an immediate equivalent uranium value (eU%) for the hole,
which, except in high grade zones, is reasonably accurate. The
gamma-log results, however, have not been used for the purposes of
estimating mineral reserves or resources unless core loss is
significant.








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Sample intervals
are generally 50 centimetres long, except where higher or lower
grade mineralization boundaries fall within the interval. In that
case, two 25 centimetre samples are collected. Flank samples of 1.0
metre are always collected where mineralization is located. A
background geochemistry sample is collected every 10 metres down
the hole.





All sampled core
is split in half, one half retained and the other sent to an
independent laboratory. Lost core is not an issue at the McClean
project as core recovery has been good. Control samples are
routinely assayed with each batch of core samples
analyzed.





The
mineralization in the various McClean deposits is highly variable
in both mineralogy and uranium content. The principal minerals
identified in the deposits are pitchblende, uraninite and
niccolite. As a result of the highly variable uranium content, a
variable density formula was developed for the McClean deposits.
This formula was modified over the years to account for the fact
that it originally tended to underestimate U3O8 content where the
U3O8 values were
associated with high values of nickel and arsenic.





No opinion can be
given regarding security of samples in the mid to late 1970s and
the late 1980s other than to indicate that subsequent geological
work and all metallurgical and geotechnical work have confirmed the
results. All procedures reviewed follow generally accepted industry
practice. A good demonstration of the reliability is that JEB and
the Sue deposits (B and C) have been mined out and more uranium has
been recovered into stockpiles than had been estimated from surface
drilling.





Mineral Reserve and Mineral Resource Estimates





Estimation
procedures have evolved over the years. At the time of the
feasibility study in 1990, polygonal methods were used for the JEB,
the Sue A, the Sue B, the Sue C deposits and for the McClean zones.
Prior to the start of mining at the JEB deposit, the mineral
reserves were re-evaluated using computerized methods whereby block
models were constructed and geostatistical methods were
implemented. Much more recently, these mineral resource estimates
have been further refined using Whittle pit optimization software.
Appropriate tests and audits of the databases on all the McClean
deposits have been carried out by past qualified Denison personnel.
In the case of JEB, Sue C and Sue B, the amount of U3O8 recovered into
stockpiles was higher than that estimated from surface
drilling.





The Company
received the McClean Technical Report from Scott Wilson RPA (now
Roscoe Postle Associates Inc.) on its mineral reserves and mineral
resources at certain of the deposits (Sue A, B, E and McClean North
and Caribou) at McClean Lake in which Denison has an interest. See
“Mineral Reserves and Mineral Resources”, above, for a
summary of the mineral resource and mineral reserve estimates
remaining, after adjusting for mining activity, as
applicable.





In preparing the
McClean Technical Report, Scott Wilson RPA reviewed previous
estimates of mineral reserves and mineral resources at the
applicable properties, and examined and analyzed data supporting
the previous estimates, as well as other available data regarding
the properties, including extensive information from Orano
Canada.





For the Sue E
deposit, Scott Wilson RPA constructed a block model using indicator
kriging to both map out and geologically constrain mineralized
areas. A block that had at least one nearby composite within 10
metres of its centre, and that had composites from at least two
different drill holes in its search neighbourhood was classified as
part of the indicated mineral resource. The indicated mineral
resource was evaluated by Scott Wilson RPA in 2005 using Whittle
economic evaluation software showing that the Sue E pit economics
were robust and mineral reserves were estimated.





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Mining was
completed at the Sue E pit during 2008 recovering about 91% of the
probable mineral reserves estimated by Scott Wilson RPA. Scott
Wilson RPA classified approximately 7.3 million of the pounds
outside the current pit as inferred mineral resources. Confirmatory
drilling in 2006 by the operator has indicated that this may be
reduced to 2.0 million pounds. Scott Wilson RPA has not
re-estimated the mineral resources based on this
drilling.





The mineral
resource estimate for the Caribou deposit is based on a block model
for which grade was interpolated using ordinary kriging. Since
there were no plans for the mining of this deposit at the date of
the McClean Technical Report, the economic potential was not
evaluated and mineral reserves were not estimated.





With respect to
the Sue D deposit, the Company received the Sue D Report in 2006,
authored by Scott Wilson RPA. Scott Wilson RPA carried out an
independent mineral resource estimate for Sue D by conventional 3-D
computer block modeling. A minimum vertical mining width of two
metres was employed with a 0.1% U3O8
cut-off.





Due to the
significant increase in the price of uranium from 2004 to 2006,
Denison engaged Scott Wilson RPA to re-evaluate the uranium
resources in the McClean North trend that are amenable to other
methods of mining. The original McClean Technical Report had only
evaluated mineral resources and mineral reserves of the high grade
portions under the assumption that they would be mined using a
blind shaft mining method. The Company received the McClean North
Technical Report on the mineral reserves and resources at the
McClean North uranium project in 2007.





The re-evaluation
of McClean North was carried out by conventional 3-D computer block
modeling. Wire frames were constructed for each of pods 1, 2 and 5.
The estimate included internal dilution, but not external dilution,
and was carried out at a 0.1% U3O8 cut-off. This
mineral resource estimate is based entirely on diamond drill
information. Block cell dimensions were selected at 8 metre model
grid east west x 5 metre model grid north south and a 2 metre bench
height or approximately 180 tonnes/block. Scott Wilson RPA
constructed a mineral resource wireframe based on kriging, and
constructed a special waste wireframe, that generally surrounds the
mineral resource wireframe, using similar kriging parameters but
with larger search distances. Subsequent to this report, the
Company and Scott Wilson RPA reviewed the block model and
estimation procedures in October 2009 and made a slight revision to
the mineral resource estimate for the McClean North
deposit.





Mining Operations





McClean Lake
consists of nine known ore deposits: JEB; Sue A, B, C, D and E;
McClean North; McClean South; and Caribou). In 1995, the
development of the McClean Lake project began. Mill construction
commenced in 1995 and ore processing activities reached commercial
production in November 1999. Mining operations also commenced, and
the following deposits have been mined out to date: JEB (1996 to
1997), Sue C (1997 to 2002), Sue A (2005 to 2006), Sue E (2005 to
2008) and Sue B (2007 to 2008). Various test mining programs from
2006 to date have also been conducted at McClean
North.





At December 2017,
the remaining ore reserves consist of a limited quantity of
stockpiled ore from historical Sue B open pit mining operations and
test mining activities at McClean North. Approximately 87,454
tonnes of Sue B ore at a grade of 0.35% U3O8 and 534 tonnes of
McClean Lake North ore (mined via SABRE), at an average grade of
4.78% U3O8, are stockpiled
on surface as at the end of 2017.








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Other than
continued test mining activities for SABRE, no additional mining
operations are planned at this time.





Low-grade special
waste from the mining of the JEB, Sue C, Sue A, Sue E and Sue B
deposits has been disposed of in the mined-out Sue C pit. In the
future, Cigar Lake special waste will also be disposed of in the
Sue C Pit. By agreement between the CLJV and the MLJV, costs to
update the Sue Water Treatment Plan and costs to dewater the Sue C
pit for Cigar Lake special waste will be shared 50/50 between the
CLJV and MLJV.





SABRE





The MLJV is
currently assessing the Surface Access Borehole Resource Extraction
(“SABRE”) mining method technology for extraction of
the McClean North deposits. The SABRE technology is experimental
and a feasibility study has not yet been completed. Previous field
tests of the SABRE technology has produced a small amount of ore,
some of which has been processed into U3O8 and some of which
remain in the ore stockpile at December 2017. See
“Denison’s Operations” below.





Processing and Recovery Operations





Processing of the
McClean Lake ore stockpiles is anticipated to occur prior to the
end of life of the McClean Lake mill. Historical processing of the
McClean Lake orebodies through 2000 to 2010 has demonstrated strong
performance, with recoveries above 97%. The MLJV anticipates
processing of the remaining stockpiles to have similar performance
results.





Development and Production





In 2012, Orano
Canada (then AREVA) initiated an internal study evaluating the
feasibility of mining the McClean North, Caribou and Sue D deposits
via conventional underground methods, which internal study was
completed in April 2014. However, no formal technical report has
been prepared by Denison in accordance with NI 43-101 and a
production decision has been deferred due to the low uranium price
environment.





Infrastructure, Permitting and Compliance Activities





The McClean Lake
uranium mill, one of the world’s largest uranium processing
facilities, is currently processing ore from the Cigar Lake mine
under the Cigar toll milling arrangement between the MLJV and the
CLJV. The site has been in operation since the late 1990’s
and consists of the mill, a tailings management facility,
administration offices and building, camp facilities, back-up power
supply, water treatment plants and a host of other minor
facilities. The site is connected to the provincial power grid and
provincial highways. Points North Landing Airport provides
transportation to and from site for personnel on a daily
basis.





As a uranium
site, the CNSC permits the operations. On July 1, 2017 the McClean
site received a 10 year license for operations until June 30, 2027.
See “Denison’s Operations”.

















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Midwest





The Midwest
project is owned by Denison (25.17%) and its joint venture
partners, Orano Canada (69.16%) and OURD (5.67%) pursuant to the
Midwest Joint Venture Agreement. Orano Canada is the operator of
the project.





Except as
otherwise noted below, this project description is based on the
project’s technical report entitled “Technical Report
with an Updated Mineral Resource Estimate for the Midwest Property,
Northern Saskatchewan, Canada” dated March 26, 2018 (the
“Midwest Technical
Report”), a copy of which is available on the
Company’s
profile on the SEDAR website at www.sedar.com. The Midwest
Technical Report was authored by Dale Verran, MSc, P.Geo,
Pr.Sci.Nat. and Chad Sorba, P.Geo, of the Company and G. David
Keller, PGeo, and Oy Leuangthong, PEng, of SRK Consulting. G. David
Keller and Oy Leuangthong are independent qualified persons for the
purposes of NI 43-101.





The conclusions,
projections and estimates included in this description are subject
to the qualifications, assumptions and exclusions set out in the
technical report. We recommend you read the technical report in its
entirety to fully understand the project.





Property Description, Location and Access





The Midwest
property is located within the eastern part of the Athabasca Basin
in northern Saskatchewan. The northern portion of the property is
located on South McMahon Lake, about one kilometre from the Points
North Landing airstrip and about 25 kilometres west by existing
roads from the McClean Lake mill on the McClean Lake property. The
site is approximately 750 km by air north of Saskatoon and about
420 km by road north of the town of La Ronge.





Access to the
Midwest property is by both road and air. Goods are transported to
the site by truck over an all-weather road connecting with the
provincial highway system. Air transportation is provided through
the Points North airstrip about 2 kilometres from the
property.





The property
consists of three (3) contiguous mineral leases, covering 1,426
hectares and contains both the Midwest Main and Midwest A deposits.
The mineral lease containing the Midwest Main deposit (ML 5115) is
556 hectares in size. Each of the mineral leases is at an annual
assessment rate of $75.00 per hectare and has sufficient approved
assessment credits to maintain the ground in good standing until
2030. There is no current production from these mineral leases.
Leases must be renewed every 10 years as part of an administrative
process.





Since the
completion of the underground test mine at the Midwest Main deposit
in 1988 and 1989, the site has been under an environmental
monitoring and site security surveillance program. At present,
there is an inactive water treatment plant, two water storage ponds
and a core storage area on the site, as well as a dam in the Mink
Arm of South McMahon Lake. All of the facilities used in the test
mine program and all of the existing surface facilities are located
on lands owned by the province of Saskatchewan. The right to use
and occupy the lands was granted in a surface lease agreement with
the province of Saskatchewan. The original surface lease agreement
of 1988 was replaced by a new agreement in 2002. This new surface
lease is valid for a period of 33 years. Obligations under the
surface lease agreement primarily relate to annual reporting
regarding the status of the environment, the land development and
progress made on northern employment and business development. The
Midwest surface lease covers an area of approximately 646
hectares.








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Location of the Midwest Main and Midwest A deposits on the Midwest
project














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Any uranium
produced from the Midwest deposits is subject to uranium mining
royalties in Saskatchewan in accordance with Part III of The Crown
Mineral Royalty Regulations. See "Government Regulation - Canadian
Royalties.” A portion of Denison's interest in the Midwest
project (i.e. 5.5% of the project reducing to 3.44% after payout)
is subject to a sliding–scale, gross overriding royalty
ranging from 2% to 4% payable to two previous owners of a portion
of the Midwest project.





There are no
known significant factors or risks that may affect access, title,
the right, or ability of Orano to perform work at/on the Midwest
property.





History





Initial
exploration work in the vicinity of the two Midwest deposits began
in 1966. Canada Wide Mines Ltd., a subsidiary of Esso Resources
Canada Ltd., was operator of the project from 1968 to 1982. From
1968 to 1975, exploration was carried out on an exploration permit
which included the area covered by the current mineral leases. Most
of the work was concentrated on the area near South McMahon Lake
where uranium mineralized boulders were found. In 1974, the
exploration permit was changed to mineral leases.





During the winter
season of 1977, one of the holes drilled through the unconformity
encountered mineralization. In January 1978, the Midwest Main
deposit was intersected by the first drill holes. During 1978
through 1980, a further 439 holes were drilled (for a total of
about 650) to delineate the deposit and to explore the surrounding
area of the mineral leases.





In 1987, Denison
acquired a 45% interest in the Midwest project and became the
operator. An underground test mine program was completed in 1989
which confirmed the results of the surface drilling program and
identified a high grade mineral reserve containing 35.7 million
pounds of U3O8 at an average
diluted grade of 4.5% U3O8, considered to be
mineable by underground methods. During this time, Denison also
performed an EM-37survey and geotechnical drilling
on the Midwest Main deposit. Exploration drilling was conducted to
the east (1988) and along the conductive trend to the north of
Midwest Main deposit (1989).





In 1993, the
respective owners of McClean Lake and Midwest combined their
interests to make one complementary project with one mill at
McClean Lake. In order to accomplish this, a portion of Denison's
interest in Midwest was exchanged for an interest in McClean Lake.
This transaction, together with several related ownership changes,
resulted in Denison's ownership interest in Midwest being reduced
to 19.5% and Minatco, Orano Canada’s predecessor in title,
becoming the operator.





In 1999, Denison
increased its interest in Midwest by 5.50% through the exercise of
first refusal rights. With the uncertainty of the timing and costs
of the Midwest development and the desire to eliminate the
obligation to pay advance and future royalties on production from
Midwest, Denison decreased its interest in Midwest from 25% to
19.96% effective March 31, 2001. Orano Canada, the operator/manager
of Midwest, also reduced its interest from 70.5% to 54.84% for the
same reason.





At the end of
2004, in order to take advantage of rapidly increasing uranium
prices, Denison again increased its interest at Midwest, along with
its joint venture partners, by buying the 20.70% interest in
Midwest then held by Redstone Resources Inc. This purchase
permitted Denison to acquire a further 5.21% interest in Midwest,
bringing its interest to 25.17%. Orano Canada’s interest
increased to 69.16% and OURD’s interest increased to
5.67%.








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Geological Setting, Mineralization and Deposit Types





The Midwest
deposits are classified as ‘unconformity-type’ uranium
deposits, and occur approximately 200 metres below surface
straddling the unconformable contact between overlying Athabasca
Group sandstones and the underlying Paleoproterozoic and Archean
basement rocks belonging to the Wollaston-Mudjatik Transition Zone.
The north-northeast Midwest structural trend that controls the
Midwest Main and Midwest A uranium deposits follows a
steeply-dipping, graphitic pelitic gneiss, basement unit that is
bounded by granitic gneisses or granite to both the east and west.
The sub-Athabasca unconformity surface is relatively flat on a
regional scale, however there is a slight uplift along the
north-northeast Midwest trend and a generally higher elevation to
the east. Fault zones in the basement are often characterized by
brecciation and strong hydrothermal alteration with clay mineral
development. These fault zones generally extend into the overlying
Athabasca Group sandstone.





The Midwest Main
deposit is lens to cigar shaped, 600 metres long, 10 to over 100
metres wide, with thicknesses ranging from five metres to 10
metres. The deposit consists of a near-massive, high-grade
mineralized core that straddles the unconformity approximately 210
metres below surface. The high-grade core is surrounded by
lower-grade, more dispersed, fracture-controlled mineralization in
both sandstone and, in minor amounts, in basement rocks. The
high-grade mineralization forms a roughly flat-lying lensoid
concentration, with a root extending down into the basement rocks
along a steeply-dipping fault.





The Midwest A
deposit is approximately 450 metres long, 10 to 60 metres wide,
ranges up to 70 metres in thickness and occurs between 150 and 235
metres below surface. Mineralization straddles the unconformity
contact with minor amounts hosted within basement structures
immediately below the unconformity. Thicker zones of mineralization
above the unconformity are concentrated in conglomerate units at
the base of the Athabasca sandstone. Similar to Midwest Main, a
high-grade core of mineralization is surrounded by a lower-grade,
more dispersed, fracture-controlled envelope.





Exploration and Drilling





Under Orano
Canada’s operatorship, exploration activities resumed in
2004. Exploration drilling was initiated some three kilometres to
the northeast of the Midwest deposit to test ground around a
historic hole MW-338 that had returned an isolated intercept of 3.8
metres at 6.9% U3O8. Between 2005 and
2009, a further 50,831 metres of drilling was completed in 191
drill holes on the property, which discovered and delineated the
Midwest A deposit and identified and evaluated several other
mineralized areas, including the Josie Zone, lying between the
Midwest and the Midwest A deposits. 76 of these holes (20,794.9
metres) have intersected the mineralization associated with the
Midwest A deposit. Additional geophysical programs were also
conducted.





The Midwest Main
deposit was intensively drilled in the late 1970’s and 1980s.
Drill holes defining the Midwest deposit include 615 drill holes,
of which 362 are mineralized. By type, these include exploration,
shallow reconnaissance (<100 metres), and geotechnical drill
holes. Only 11 drill holes have been completed on the Midwest Main
deposit area under Orano Canada’s operatorship. Four inclined
geotechnical holes were drilled in 2004 and four shallow
geotechnical drill holes were completed in 2006. Three additional
exploration drill holes were carried out within the deposit
outlines in 2006 (MW-677, MW-678, and MW-685).





No exploration
work was conducted at Midwest during the period 2010 to
2017.








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Sampling, Analysis and Data Verification





During 2017,
Orano Canada undertook a comprehensive review of the databases for
both the Midwest Main and Midwest A deposits ahead of an updated
mineral resource estimate. Concerns were identified at both
deposits that needed to be addressed to increase both the
confidence and the accuracy of the final estimate.





Given the
historic nature of the data at Midwest Main a limited amount of
data was readily available digitally: downhole gamma probe
(“probe”) data existed only as paper logs making it
previously unavailable to be used, no comprehensive 3D geological
model was available, perched mineralization was not fully modeled,
and further data QAQC was needed. Midwest A has a much more modern
data set; however, no dry bulk density measurements were available,
the latest drilling from September 2007 to December 2009 was not
taken into account in the previous estimate, and the High Grade
Zone was assigned an average uranium grade rather than performing
grade modelling. Additionally, both deposits required new probe to
chemical uranium assay grade (“grade”) correlations for
the calculation of equivalent uranium (eU), combination of probe
and grade data based on core recovery and probing/drilling
parameters to be available for estimation, updated lithology and
structural models (geological models), and an updated block
model.





Work began with
verifying the grade data against assay certificates and a
historical nine track database from ESSO. Some discrepancies were
noted in the sample locations as well as some of the grades due to
typographical errors. When compared to the original drill logs and
the probe logs, these were able to be rectified.





The Midwest
deposits often have core loss associated with the mineralization,
due to the high amount of clay alteration and quartz dissolution
which makes core recovery while drilling difficult. This results in
gaps in the grade dataset that are typically addressed by using
probe equivalent uranium (eU) data. Digital probe data was
available for Midwest A, however for Midwest Main most of probe
data was never digitized and remained only available on paper logs.
The paper logs for 218 holes were digitized and added to the
Midwest data set. This was followed up by ensuring the probe data
was depth corrected (depth matched with grade data), as well as the
creation of new probe to grade correlations for both
deposits.





Midwest Main had
a robust density to grade correlation; however, Midwest A did not
have any dry bulk density measurements taken. The only density data
at Midwest A was in the form of specific gravity measurements which
do not take into account porosity and therefore tend to
overestimate the density. Due to the high density of uranium,
density is a vital reference for the expected tonnage of high-grade
uranium deposits, which has a direct effect on the amount of
uranium estimated. Given this uncertainty at Midwest A, previous
resource estimations were forced to use a very conservative grade
to density regression formula to avoid overestimation of resources.
During a 2017 site visit, 25 dry bulk density measurements were
taken from the remaining Midwest A drill core and sent for dry bulk
density and geochemical analyses. A new grade to density regression
formula was established showing an increase to the correlation by
approximately 10%.





Various chemical
assay methods have been employed at the Midwest Project prior to
Orano Canada assuming operatorship in 2004. The methods described
herein pertain to the program from 2004 onwards. Drill core with
anomalous total gamma radioactivity (>200 counts per second
utilizing a SPP2 or SPPc scintillometer) was sampled over 0.5 metre
intervals. Sampling is undertaken on site by splitting the core in
half, with one half submitted for analysis and the other half
retained in the core box for future reference. Uranium chemical
assays are performed by the SRC Lab located in
Saskatoon.





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Sample
preparation involves crushing and pulverizing core samples to 90%
passing -106 microns. Splits of the resultant pulps are initially
submitted for multi-element ICP-MS analysis following partial
(HNO3:HCl) and total (HF:HNO3:HClO4) digestions. Samples with
≥ 1,000 ppm U (partial digest) are re-assayed for U3O8 using
an ISO/IEC 17025:2005 accredited method for the determination of
U3O8 weight %. Pulp splits are digested using aqua-regia and the
solution analyzed for U3O8 weight % using ICP-OES.





For composite
exploration samples, collected over 20 metre (upper sandstone) or
10 metre intervals (lower sandstone and basement), major and trace
elements are determined using ICP-MS or ICP-OES after partial and
total digestions. Boron values are obtained through NaO2/NaCO3
fusion followed by ICP-OES. In addition to internal checks by the
SRC Lab, Orano has rigorous quality assurance and quality control
("QAQC") procedures including the insertion of standard reference
materials, blanks and field duplicates.





For mineral
resource estimation purposes, wherever core recovery was less than
75%, the radiometric equivalent uranium values (“eU”)
derived from a calibrated downhole gamma probe are substituted for
chemical assays where possible. Core recovery at Midwest Main is
typically good with poorer recovery observed at Midwest A. For the
Midwest A and Midwest Main updated mineral resource estimates
reported herein, 64% and 16% of the assay intervals relied on eU
grades, respectively.





Orano Canada has
performed detailed QAQC and data verification, where possible, of
all datasets, which in Denison’s opinion are in accordance
with industry best practice. Denison has performed additional QAQC
and data verification of the drilling database including review of
the QA/QC methods and results, verification of assay certificates
against the database assay table, review of downhole probe and eU
calculation procedures, standard database validation checks and two
site visits to the Midwest project in early 2018. Denison has
reviewed Orano Canada’s procedures and protocols and
considers them to be reasonable and acceptable for mineral resource
estimation.





Mineral Processing and Metallurgical Testing





There has been no
mineral processing or metallurgical test work completed on the
Midwest A deposit. It is recommended that initial metallurgical
testing be carried out in conjunction with future drilling
campaigns.





Several programs
of metallurgical testing have been carried out on Midwest Main
mineralization. The two main studies were by Melis Engineering in
1990 and by SEPA (Service d’Études, de
Procédés et Analyses, engineering department of the Orano
Group in France) in 1998. Both studies show that good metallurgical
recovery of uranium can be achieved. The current McClean mill
milling process differs from what was planned by Melis as a
separate facility was planned in the study. The leaching tests done
by SEPA on the Midwest Main mineralization samples showed that
99.5% of uranium could be extracted using these
conditions:





● Leach
time 24 hours


● Acid
addition 120 kg/tonne


● Free acid
at end of test 25 g/l


●
Oxidation, 02 at 2 bar pressure


● Redox 470
m.v.








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The current
process for Cigar Lake ore being processed at the McClean mill
requires an eight hour leaching time which is substantially less
than what is proposed as optimal for Midwest Main ore (24 hours).
As the mill has recently undergone upgrades, it is expected these
leaching times will be reviewed.





The test work has
demonstrated that a metallurgical recovery for uranium of 98% from
Midwest Main mineralization can be obtained.





The Midwest Main
deposit has a relatively high amount of arsenic (5-10% overall),
which could affect the water quality discharge from the mill if not
properly precipitated into the tailings. The SEPA study proposed
using ferric sulphate to precipitate the arsenic in the tailings.
Currently the mill is addressing arsenic in the Cigar Lake ore,
which also contains high levels of arsenic, using barium chloride
and ferric sulphate to precipitate it from solution.





Test work was
conducted by Denison in 1992 at Lakefield Research to determine if
the recovery of nickel and cobalt was feasible along with the
extraction of uranium (Lakefield Research, 1992). Test work
indicated that a precipitate with good grades of nickel and cobalt
could be produced from a raffinate solution after the arsenic and
radium are precipitated. It is estimated that an overall process
recovery of 54% for both nickel and cobalt could be
achieved.





The JEB mill has
seen many recent upgrades and changes since the 1992 and 1998
studies were conducted. Review of the studies and additional
metallurgical testing will likely need to be conducted prior to
mining of Midwest Main.





Mineral Resource Estimates





The Company
retained SRK Consulting to independently review and audit an
updated mineral resource estimate for the Midwest project completed
by Orano Canada in November 2017. The review and audit was done in
accordance with CIM Definition Standards (2014) and NI 43-101. The
Company received a memorandum from SRK Consulting dated March 9,
2018, which was incorporated into the Midwest Technical Report. See
“Mineral Reserves and Mineral Resources”, above, for a
summary of the mineral resource estimate for the Midwest
project.





In November 2017,
Orano Canada provided Denison with a comprehensive Project database
consisting of drill hole data, mineralized wireframes and block
models for both the Midwest Main and Midwest A deposits. Prior to
mineral resource estimation, Orano had performed detailed QAQC and
data verification of all datasets, which in Denison’s opinion
are in accordance with industry best practice. Denison performed
additional QAQC and data verification of the database including
review of the QA/QC methods and results, verification of assay
certificates against the database assay table, standard database
validation checks and two site visits to the Midwest project in
early 2018. Denison has reviewed Orano’s procedures and
protocols and considers them to be reasonable and acceptable for
mineral resource estimation. The Midwest database was sent to SRK
to conduct review and audit of the updated mineral resource
estimate completed by Orano Canada. For the audited mineral
resource estimate, SRK used data collected from several drilling
campaigns completed between 1977 and 2009, including a total of 156
drill holes for Midwest A and 305 drill holes for Midwest Main. The
audited mineral resource estimate includes expanded Low Grade and
High Grade zones for Midwest A and three primary mineralized zones
at Midwest Main, namely Unconformity, Perched and Basement zones. A
summary of the audited estimation methodology and for Midwest A and
Midwest Main are described below.








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The Midwest A
block model consists of two main mineralized domains, Low Grade and
High Grade zones constructed using a 0.05% U cut-off with minimum
thickness of two metres and 10.0% U cut-off with minimum thickness
of one metre, respectively. A perched zone was identified, but was
not considered for resource estimation. The Midwest A deposit
consists of data from 113 boreholes of which 69 boreholes intersect
the mineralization itself. Grades are comprised of 64% eU data,
derived from a calibrated downhole gamma probe, and 36% chemical
assay data. Sample data were composited to one metre length. An
accumulation-like approach was used, wherein density multiplied by
grade (DG, where grade is in percent uranium) and density were
estimated into a three-dimensional block model, constrained by
wireframes in two passes using ordinary kriging. The grade was then
calculated into each block by dividing the estimated DG by the
estimated density. A block size of 5 by 5 by 2 metres was selected.
Search radii were based on variogram analyses with a relatively
flat ellipsoid used aligned roughly to the unconformity
surface.





Grade capping was
not performed, however, the treatment of high grades was considered
during estimation by limiting the influence of DG composites
greater than 20 and density composites greater than 3, to a
neighbourhood of 7.5 cubic metres within the low-grade zone. Within
the High Grade zone SRK applied a high grade limited radial
influence of DG composites greater than 200, within a 7.5 metre
cubic volume. Classification is based on drillhole spacing, with
blocks classified as Indicated only found in the sandstone and
upper basement portion of the Low Grade zone with drillhole space
of 30 metres or less. The lower basement and all other sandstone
blocks are classified as Inferred.





The Midwest Main
block model considered three main mineralized domains: one
Unconformity, 19 Perched and a one Basement zone constructed using
a 0.05% U cut-off with minimum thickness of two metres. The Midwest
Main deposit consists of data from 305 boreholes that intersected
the mineralization, with new downhole gamma probe eU data for
unsampled locations or in areas of poor core recovery (less than
75% core recovery). Grades are comprised of 16% eU data, derived
from a calibrated downhole gamma probe, and 84% chemical assay
data.Sample data were
composited to one metre length.





Similar to
Midwest A, two attributes, density and density multiplied by grade
(DG), were calculated into each block using ordinary kriging, and
the uranium grade was then calculated by dividing the estimated DG
by the estimated density. A block size of 5 by 5 by 2 metres was
selected. Search radii were based on variogram analyses with a
relatively flat ellipsoid used aligned roughly to the unconformity
surface.





Capping was not
performed, however, higher grade composites were limited to a
5-cubic-metre neighbourhood of influence. This was applied to all
zones, with high grade thresholds varying by zone. Classification
is based on estimation passes, with blocks classified as Indicated
only in the Unconformity zone and in regions of tight borehole
spacing up to a nominal spacing of 17.5 metres. All other blocks
are classified as Inferred.





Exploration, Development and Production





The 2018
exploration program at the Midwest project, operated by Orano
Canada, consists of 5,000 metres of diamond drilling in
approximately 15 holes. Drilling will focus on brownfield
exploration at Midwest Main (5 holes to test basement targets) and
along the Points North conductor (5 holes to test unconformity and
basement targets). An additional 4 to 5 holes are planned to
upgrade the high-grade inferred resources at Midwest A to an
indicated category.








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In early 2007,
Orano Canada completed an internal study evaluating the feasibility
of mining the Midwest Main deposit via open pit mining methods and
processing the resulting ore at the McClean Lake mill. In November
2007, the Midwest Joint Venture partners made a formal production
decision to proceed with the development of the Midwest Main
deposit. Subsequently, in November 2008, the Midwest Joint Venture
partners announced that the development of the Midwest Main project
would be delayed for an indefinite period due to delays and
uncertainties associated with the regulatory approval process,
increasing capital and operating cost estimates and the depressed
state of the uranium market at the time.





In September
2011, the final version of the Midwest Project Environmental Impact
Statement (“EIS”) was submitted to provincial and
federal governments. A Comprehensive Study Report was drafted by
the CNSC and circulated for federal, provincial and aboriginal
review, and in September 2012, the Midwest EIS was
approved.





At this time, no
development or production is currently planned.

















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Other Properties, Athabasca Basin, Saskatchewan





Results from the
2017 programs at Denison’s highest priority non-material
properties are discussed below. For Sampling, Analysis and Data
Verification Procedures with respect thereto, see “Athabasca
Exploration: Sampling, Analysis and Data
Verification”.





Murphy Lake Project





Denison holds a
82.58% interest in the Murphy Lake project, with Eros Resources
holding the remaining 17.42%. Denison is the operator. Murphy Lake
is located approximately 30 kilometres northwest from the McClean
Lake mill and is contiguous with the northwest boundary of
Denison's Waterbury Lake property. The Murphy Lake property is
comprised of seven mineral claims covering 12,038 hectares in two
non-contiguous blocks, namely the southern block (5 claims, 10,506
hectares) and northern block (2 claims, 1,532
hectares).





In 2015, Denison
carried out a diamond drilling program consisting of five holes
totalling 1,818 metres on the southern block of the Murphy Lake
property. The program focused on testing DCIP resistivity targets
along the southern Murphy Lake trend (Dalton Lake trend), where
limited historical drilling had intersected significant structure
and alteration both in the sandstone and the basement. The first
hole of the program, MP-15-03, encountered weak uranium
mineralization over a significant width. The hole intersected 0.25%
U3O8 over 6.0 metres
starting at a depth of 270 metres at the sub-Athabasca
unconformity. The mineralization is associated with a zone of
strong sandstone alteration including desilicification and clay
over a hematite cap. Basement rocks immediately below the
mineralization consist of graphitic pelitic gneisses that are in
fault contact with both the overlying meta-arkoses and the
underlying granites. Four additional drill holes were completed to
follow up on the mineralization in MP-15-03. While none of the
holes intersected significant mineralization, all encountered
significant structure and alteration, suggesting the presence of a
prospective mineralized system. Drill hole MP-15-06 intersected
weakly elevated radioactivity straddling the unconformity
approximately 23 metres south of the mineralized section in
MP-15-03. Sandstone litho-geochemistry samples from this section
returned elevated partial uranium values (>1 ppm) extending more
than 150 metres above the mineralization.





A drilling
program was completed during the 2016 winter program, as well as
ground gravity and DC-IP resistivity surveys. A total of 3,695
metres in 10 drill holes were completed to mainly test high
priority targets identified along strike and on section of
MP-15-03. Drilling confirmed the continuity of the intense
hydrothermal sandstone alteration system, identified in 2015, over
a strike length of 850 metres. Weak uranium mineralization was
intersected in the sandstone associated with intense hematite and
clay alteration in three drill holes (MP-16-08, MP-16-11 and
MP-16-17). Highlight results include 0.19% U3O8 over 2.9 metres
(drill hole MP-16-08), 0.13% U3O8 over 14.5 metres
(drill hole MP-16-11) and 0.04% U3O8 over 16 metres
(drill hole MP-16-17). Drill hole MP-16-08, drilled on section with
MP-15-03, identified uranium mineralization associated with a
parallel graphitic fault zone approximately 70 metres to the south.
Drill holes MP-16-11 and MP-16-17 were both drilled along strike to
the west of drill hole MP-15-03 at 200 metres and 100 metres,
respectively.





During the winter
2017, Denison completed a nine hole drill program, totaling 3,433
metres, with a primary focus on testing the Dalton Lake trend both
to the east and west along strike where alteration remained open
and untested targets were evident in the ground geophysical and
geochemical datasets. Additional drilling was completed to evaluate
other high priority targets associated with parallel trends in the
area. The winter 2017 drilling program successfully extended the
known alteration system over a continuous strike length of 1.8
kilometres, though no significant radioactivity or uranium
mineralization was encountered.





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Crawford Lake Project





Crawford Lake is
100% owned by the Company and is located immediately southwest of
Denison's Wheeler River project, approximately 10 kilometres south
of Cameco’s Millennium deposit in the southeast portion of
the Athabasca Basin. The Crawford Lake property is comprised of
five contiguous mineral claims covering 11,800
hectares.





During the third
quarter of 2016, two holes were completed for a total of 1,706
metres which focused on targets on the CR-3 conductive trend from a
2014 resistivity survey. The first hole completed (CR-16-27A)
intersected 100 metres of strong sandstone alteration above the
unconformity and a wide graphitic structure 90 metres below the
unconformity suggesting the optimal target at the unconformity
remains untested. The second hole (CR-16-28) was targeting a
previously untested parallel conductor to the main CR-3 trend.
CR-16-28 intersected 100 metres of strong sandstone alteration and
a wide structurally disrupted graphitic conductor. No elevated
radioactivity or uranium mineralization was intersected in either
of the holes. The CR-3 trend remains highly prospective with the
previous discovery of weak uranium mineralization and both strong
sandstone and basement alteration present.





A single 519
metre drill hole (CR-17-29) was completed during winter 2017 to
utilize ice formation to test a target occurring below a lake. The
single hole was completed on the CR-3 conductive trend targeting a
‘structural bend’ interpreted from ground geophysical
data. The hole was located between drill holes CR-15-24 and
CR-16-26, located 300 metres along strike to the southwest and
northeast respectively. Both of these previous holes intersected
strongly altered and structurally disrupted basement. Drill hole
CR-17-29 intersected weakly elevated total gamma radioactivity (280
counts per second) at the unconformity and a graphitic unit with
faults at 43 metres and 52 metres below the unconformity. The
alteration surrounding the basement faults was not as substantial
as the alteration in CR-15-24 and CR-16-26, however the optimal
unconformity target remains untested on this portion of the CR-3
trend.





Four holes were
completed during summer 2017, for a total of 2,068 metres. Three of
the holes targeted the CR-3 conductive trend and one hole targeted
a parallel conductive trend to the CR-3. Two of the three holes on
the CR-3 intersected significant alteration including 250 metres of
strong sandstone alteration in CR-17-32 along with total gamma
radioactivity of 650 counts per second in healed fractures at the
unconformity. The drill hole (CR-17-31) testing the parallel trend
intersected strong sandstone alteration and structure higher up in
the sandstone, suggesting the optimal target was overshot. The CR-3
area (including parallel trends) remains prospective with continued
discovery of weak uranium mineralization at the unconformity and
limited historical drilling.





Hook-Carter Project





In November 2016,
Denison acquired an immediate 80% ownership of the entire
Hook-Carter property (“Hook-Carter”), from ALX, in
exchange for the issuance of 7,500,000 common shares of Denison.
Under the terms of the agreement, ALX will retain a 20% interest in
Hook-Carter and Denison has agreed to fund ALX's share of the first
$12,000,000 in expenditures. Denison will be the operator of the
project and will retain full discretion as to the nature, extent,
timing and scope of all work projects on Hook-Carter. Denison
agreed to a modest work commitment, whereby Denison is required to
spend $3,000,000 on the property over the first 3
years.





2017 Annual Information Form   
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If Denison does
not meet the $3,000,000 work commitment, ALX's interest will
increase from 20% to 25% and Denison's interest in the project will
decrease from 80% to 75%. The parties have agreed to form a joint
venture thirty-six months after the effective date of the
agreement, in which all material decisions shall be carried by a
vote representing a 51% ownership interest. The Denison common
shares issued to ALX are subject to an escrow arrangement, whereby
1/6th of
the shares were available to ALX on closing, and a further
1/6th of
the shares are to be released from escrow in 6 month increments
following the closing.





In November 2016,
Denison also completed the purchase of the Coppin Lake property
("Coppin Lake") from Orano
Canada and UEX Corporation. Coppin Lake comprises ten mineral
claims covering an area of 2,768 hectares in the western portion of
the Athabasca Basin region in northern Saskatchewan. The claims lie
between, and are contiguous with, both the Carter East and Carter
West blocks of the Hook-Carter property. Under the terms of the
Hook-Carter acquisition, ALX has elected to acquire an interest in
Coppin Lake from Denison that is equal to ALX's interest in
Hook-Carter and the Coppin Lake claims will be included as part of
the overall Hook-Carter property.





Hook-Carter is
located near the southwestern margin of the Athabasca Basin, in
northern Saskatchewan approximately 25 kilometres east of Highway
955. The property is accessible year round by utilizing a
combination of vehicular and helicopter and/or fixed wing aircraft.
Hook-Carter is highlighted by 15 kilometres of strike potential
along the Patterson Lake Corridor – host to the recently
discovered Triple R deposit (Fission Uranium Corp.), Arrow deposit
(NexGen Energy Ltd.), and Spitfire discovery (Purepoint Uranium
Group Inc., Cameco Corp., and Orano Canada (formerly AREVA
Resources Canada Inc.)) which occur within 8 to 20 kilometres of
Hook-Carter. The property also covers significant portions of the
Derkson and Carter Corridors which provide additional priority
target areas (see location map below).





Hook-Carter Property, in Relation to Nearby Uranium Deposits and
Prospects











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The property is
currently comprised of 45 claims (41 contiguous and four separate
claims) covering 20,522 hectares with an annual assessment
requirement of $400,925 to maintain title to the mineral claims.
Certain specific claims on the property are subject to certain Net
Smelter Return Royalties (2.0% or 2.5% with fifty percent buyback)
or Gross Overriding Return Royalties (2.5% with forty percent
buyback).





Hook-Carter
features between 250 and 700 metres of Athabasca Group sandstone
cover overlying the basement rocks that define the prospective
geological trends or corridors. As a result, Hook-Carter offers
both basement- and unconformity-hosted uranium deposit
potential.





Hook-Carter is
significantly underexplored compared with other properties along
this trend with only eight historic drill holes, including only
five holes over the 15 kilometres of Patterson Lake Corridor strike
length. Three historic holes have been completed on the Derkson
Corridor and no drilling has been carried out on the Carter
Corridor. Results from historic holes (including sandstone
alteration, geochemistry and basement geology and structure)
suggest favorable environments for the presence of
unconformity-related uranium deposits. All the holes drilled to
date were designed to test the unconformity (seldom penetrating
more than 100 metres into the basement) and therefore the basement
is considered unexplored. The five holes on the Patterson Lake
Corridor are between 1.5 and 4.3 kilometres apart and considering
the corridor is comprised of multiple conductors, significant space
and potential exists for sizeable deposits.





Previous
exploration work has been dominated by geophysical surveys dating
back to 1997. Airborne surveying has included property-wide
electromagnetics (including a VTEMTM survey on the Patterson
Lake Corridor), a property-wide medium-resolution magnetic survey
and limited Falcon® Airborne Gravity Gradiometry and HeliSAM
TEM surveying. These data sets provide an excellent repository for
the interpretation of basement geology and area selection for
further targeting. Ground geophysical surveying has included
property-wide electromagnetic surveys on a reconnaissance spacing.
The airborne and ground electromagnetic survey results indicate the
prospective corridors on Hook-Carter are comprised of multiple
conductors suggesting numerous graphitic target horizons are
present. Surficial surveys completed include lake sediment
sampling, radiometric sampling, and boulder sampling. Anomalies
produced by boulder and lake geochemistry along the Patterson Lake
corridor provide further encouragement for mineralization.
Approximately 3 kilometres southwest along trend of the Hook-Carter
property boundary, drilling on the Derkson Corridor has previously
returned mineralized results approximately 5 metres below the
unconformity (0.24% U3O8 over 2.5 metres
reported in drill hole DER-04 by SMDC-Imperial Oil, 1978,
Assessment File Number 74F11-0008, Saskatchewan Mineral Assessment
Database).





During 2017,
exploration activities at the Hook-Carter project included ground
geophysical surveying over the shallower portions of the Patterson
Corridor. A Moving Loop Time-Domain Electromagnetic
(“MLTEM”) survey and a DC-IP resistivity survey were
completed on the HC-17-G1 grid, which was cut in early winter 2017.
The MLTEM survey identified five steeply east-dipping apparent
conductors, named HC-01 to HC-05. The conductors are interpreted to
be basement hosted graphitic structures that would form drilling
targets. The DC-IP resistivity survey has generated numerous
additional targets, both at the unconformity and within the
basement, some of which are coincident with the MLTEM
targets.





Denison plans to
carry out a substantial exploration program in 2018 consisting of
approximately 10,000 metres of diamond drilling. The program will
test a number of high-priority targets identified by the 2017 MLTEM
and Spartan DC-IP resistivity surveys.








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South Dufferin





The South
Dufferin project is a 100% Denison owned property comprising 14,364
hectares in six contiguous mineral claims. The property lies just
off the southern margin of the Athabasca Basin and covers the
southern extension of the Virgin River Shear Zone which hosts known
uranium mineralization at Cameco’s Centennial deposit
approximately 20 to 25 kilometres along trend to the north.
Exploration potential exists for basement-hosted uranium
mineralization associated with the Dufferin Lake fault and parallel
faults within the Virgin Lake Shear zone.





During 2015 and
2016, soil and radon sampling programs were conducted over the
property. The surveys were successful in generating numerous
anomalies which, based on their size, amplitude and orientation,
could represent uranium mineralization occurring in basement rocks
beneath the glacial till cover. During 2017, horizontal loop
electromagnetic (HLEM) survey coverage and combined total field
magnetic and VLF electromagnetic (VLF-EM) surveying was completed
on three grids. Several coincident soil/radon and electromagnetic
anomalies have been identified and have resulted in five priority
drill target areas. A diamond drilling program is proposed for
summer 2018, to be comprised of approximately 2,200 metres of
drilling in 16 holes.





Mann Lake





The Mann Lake
exploration project is located 25 kilometres southwest of the
McArthur River mine and is on trend between Cameco's Read Lake
project and Denison's 63.3% owned Wheeler River project in
Saskatchewan's eastern Athabasca Basin. The property is comprised
of two mineral claims covering 3,407 hectares. The Mann Lake
project is a joint venture between Cameco (52.5%), Denison (30%)
and Orano Canada (17.5%). Cameco is the operator.





During 2014 and
2015 a significant zone of unconformity mineralization was
discovered by Cameco along the Granite Contact (“GC”)
fault over a 600 metre strike length, highlighted by 6.7%
U3O8 over 3.9 metres
in drill hole MN-066-01. The winter 2016 drilling program was
focused on testing the southern extent of the GC fault, which is
interpreted to extend approximately 2.4 kilometres from the
mineralized zone to the southern property boundary. Three holes
were completed, two of which identified a significant sub-Athabasca
unconformity offset related to the GC fault, including significant
alteration and anomalous geochemistry, approximately 300 metres
from the southern property boundary on section L500N. As a result,
the 2016 exploration program was increased to allow for a further 3
holes which were completed in the second quarter of 2016. Drill
hole MN-078, designed to test the unconformity offset on section
L500N, pierced the unconformity 10 to 15 metres west of optimal
target and intersected weak uranium mineralization (up to 400 cps
on the handheld total gamma scintillometre) over 1 metre. A further
two holes were drilled 200 metres to the south on L300N to test the
GC fault offset at the unconformity. Drill hole MN-079 intersected
significant structure and alteration in the lower sandstone
associated with the GC fault, including elevated radioactivity up
to 800 cps on the handheld total gamma scintillometer, and was
interpreted to have overshot the optimal target by approximately 40
metres. Drill hole MN-080, drilled 40 metres to the east of MN-079,
intersected the damage zone of the GC fault in the basal sandstone
and intersected the GC fault zone approximately 50 metres below the
unconformity within graphitic pelitic gneiss. The significant
structure, alteration and unconformity offset first identified on
L500N associated with the GC fault was confirmed to be present on
L300N and to have associated elevated radioactivity. No field work
was undertaken by Cameco during 2017, and no field work has been
proposed by Cameco for 2018.








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67





Other Denison Athabasca Projects





Denison’s
other Athabasca projects range in exploration maturity and present
numerous exploration opportunities. Denison continues to review its
significant land package with a view to generating new exploration
targets or creating spin-out opportunities. During 2017,
exploration programs on Denison’s other Athabasca projects
included DCIP resistivity surveying at Bachman Lake and Moon Lake
South. Exploration for 2018 on Denison’s other Athabasca
projects is expected to include a ground geophysical survey at
Hatchet Lake.





Projects
(as at Dec 31
2017)
Denison
%
Ownership
JV
Partner
#
Claims
HectaresBachman Lake
100%
N/A
5
11,419Bell Lake
100%
N/A
8
23,642Brown Lake
100%
N/A
4
1,853Candle Lake
44.62%
Uranium One/JCU
1
2,595Darby
59.49%
Uranium One
10
17,564Epp Lake
100%
N/A
2
1,586Ford Lake
100%
N/A
8
10,924Hatchet Lake
70.15%
Eros Resources Corp.
8
19,340Jasper Lake
100%
N/A
2
1,790Johnston Lake
100%
N/A
7
24,598Lynx Lake
59.49%
Uranium One
1
1,274Marten
100%
N/A
2
5,008Moon Lake
59.49%
Uranium One
2
4,590Moon Lake North
100%
N/A
5
788Moon Lake South
51.00%(1)
N/A
1
2,716Moore Lake
100%(2)
N/A
12
35,705Packrat
100%
N/A
1
1,621Park Creek
49.00%
Cameco
8
7,798Perpete Lake
100%
N/A
2
1,058Russell Lake
37.82%
Cameco/Boyko
1
355Stevenson River
100%
N/A
1
3,751Torwalt Lake
100%
N/A
1
812Turkey Lake
100%
N/A
1
3,789Waterbury North
100%
N/A
2
705Waterbury South
100%
N/A
6
1,063Waterfound
14.42%
Orano Canada/JCU
25
11,670Waterfound North
59.49%
Uranium One
4
4,124Wolly
21.89%
Orano Canada/JCU
17
23,700Wolverine
100%
N/A
3
5,735





Notes:


(1)
 Subject of an option
agreement between Denison and CanAlaska Uranium Ltd., pursuant to
which Denison can earn up to a 75% interest in the
property.


(2)
 Subject of the Skyharbour
Agreement, pursuant to which Skyharbour can acquire a 100% interest
in the property, subject to certain buy-back options exercisable by
Denison.








2017
Annual Information
Form         
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ATHABASCA EXPLORATION: SAMPLING, ANALYSIS AND DATA
VERIFICATION





The following section details procedures and
protocols for all Athabasca exploration programs operated by
Denison in reference to drill hole surveying, downhole radiometric
surveying, core logging, core sampling, sample preparation methods,
analytical procedures, Quality Assurance and Quality Control
(“QA/QC”) and data
verification.





Drill Hole Surveying





Drill
collars are typically sited and surveyed in the field using a
Differential Global Positioning System (“DGPS”) to
determined accurate coordinates and elevation. The drill rig
azimuth and dip is aligned using a field compass set to the
appropriate magnetic declination. The trajectory of all drill holes
is determined with a Reflex survey instrument in single point mode,
which measures the dip and azimuth at 50 metre intervals down the
hole.





Downhole Radiometric Probe Surveying





When possible,
all drill holes are surveyed immediately after drilling with a
downhole radiometric probe to measure natural gamma radiation. Each
survey consists of either a HPL2375 single sodium iodide (NaI)
scintillation crystal tool or a 2GHF-1000 triple gamma (one sodium
iodide crystal and two ZP1320 high flux Geiger-Mueller (GM) tubes)
tool attached to a MX-Series winch with a MGX data recorder
connected to a portable computer. All logging instruments are
manufactured by Mt. Sopris Instruments Inc., Denver CO and powered
by a portable Honda generator.





Downhole logging
measurements are completed within the drill rods for both down and
up survey runs using MSLog software provided by Mt Sopris. Logging
speeds are maintained at approximately 10 metres/minute. Individual
data recordings are stored separately for each run on a portable
laptop computer.





Total count
measurements from each survey are converted to equivalent grade
U3O8 % (e
U3O8)
values using conversion coefficients derived from calibration
facilities at the Saskatchewan Research Council (SRC) pits located
in Saskatoon, Saskatchewan. The calibration facilities allow for
regular checks on both probes and probing equipment and to monitor
or determine maintenance issues before field operations begin. This
site consists of four mineralized holes, with isolated uranium
concentrations of 1.4, 1.6, 1.6 and 0.21 metres wide with U grades
varying from 0.063, 0.29, 1.25 and 4.07%, respectively. Individual
probes are calibrated using the NaI crystal measurements a minimum
of two times per year, normally before and after the winter and
summer field seasons. Survey results are also corrected for
attenuation of signal in water and for the thickness of steel pipe
in the hole. GM tubes are checked for drift at the site, however
calibration factors for these probes was derived separately using
direct comparisons of total count values with assay core results as
high as 80% U3O8. The
“in-situ” nature of this calibration procedure allows
for a wider spectrum of predicted results than using the SRC
calibration facilities.





The Company
typically reports preliminary radiometric equivalent grades ("e
U3O8 "), derived from
a calibrated downhole total gamma probe, during its exploration
programs and subsequently reports definitive assay grades following
sampling and chemical analysis of the mineralized drill
core.








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Core Logging





Denison employs
suitably qualified persons to log all drill core in detail at
dedicated, custom-built core logging facilities proximal to
drilling operations. Routine logs completed for each drill hole
include lithology, sandstone texture, paleoweathering,
mineralization, alteration, structure (interval and point),
geotechnical and gamma (handheld scintillometer). Where required
for geophysical survey reconciliation, additional logs may include
magnetic susceptibility and other physical property measurements.
For advanced projects where mining studies may be applicable
geotechnical logs are expanded and may also include point load
testing. All logging data, together with collar and survey
information and a drill hole summary, are uploaded to a DH Logger
database with central storage on Denison’s server at the
Saskatoon office. In addition, drill core is photographed, both wet
and dry, before it is stored at project sites either in racks or as
cross-stacks. Drill core handling and sampling protocols are in
accordance with industry best practices.





Core Sampling, Sample Preparation and Assaying





Assay Samples





Denison submits
drill core samples for chemical U3O8 assay for all
mineralized intervals, where core recovery permits. Mineralized
intervals are identified by handheld scintillometre and confirmed
by downhole gamma probe logs. All mineralized core is broken into
approximate 10 centimetre pieces and measured with a handheld
scintillometer (RS-120 or RS-125) by removing each piece of drill
core from the ambient background, noting the most pertinent
reproducible result in counts per second (“cps”), and carefully returning it
to its correct place in the core box. Any core registering over 500
cps is marked for sampling, typically over 50 centimetre intervals.
A threshold of 300 cps has been used at Wheeler River’s
Gryphon deposit since the beginning of 2017. Additional
non-mineralized ‘shoulder’ samples are marked over 50
centimetre intervals to flank both ends of the mineralized
intervals. In areas of strong mineralization more than one sample
on either end is sometimes required. All core samples are split in
half with a hand splitter according to the sample intervals marked
on the core. One-half of the core is returned to the core box for
future reference and the other half is bagged, tagged, and sealed
in a plastic bag. Bags of mineralized samples are sealed for
shipping in metal or plastic pails depending on the radioactivity
level.





Because the
mineralized drill cores are classified as hazardous materials and
are regulated under requirements governing the transport of
dangerous goods, Denison staff have been trained in the proper
handling and transport of the cores and deliver them from the core
facility directly to the laboratory without outside
contact.





All drill core
U3O8 assays are
conducted by the SRC Lab.The assay sample preparation and
analytical procedures are as follows:





●
 Drill core samples are
received by the analytical laboratory from Denison in sealed
five-gallon plastic or metal pails. Each sample is contained in a
sealed plastic bag with a sample tag. A packing slip is enclosed
that contains instructions and a sample number list. Samples are
verified against the packing slip. Any extra samples or missing
samples are noted and Denison is informed.


●
 Samples are sorted and
processed according to location (sandstone or basement origin) and
level of radioactivity.


●
 Sample preparation includes
drying, jaw crushing to 60% passing -2 millimetres and pulverizing
to 90% passing -106 microns.





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Form         
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●
 The resultant pulp is split
and digested using a two-acid partial digest (HNO3:HCl) and a
three-acid ‘total’ digest (HF: HNO3:HClO4) and the
respective solutions analyzed for multi-elements, including
uranium, using ICP-OES (SRC Lab analytical method ICP1). Boron
values are obtained through NaO2/NaCO3 fusion followed
by ICP-OES.


●
 When uranium partial values,
as obtained above, are ≥1,000 ppm, sample pulps are
re-assayed for U3O8 using SRC
Lab’s ISO/IEC 17025:2005 accredited method for the
determination of U3O8 wt%. A split of
the sample pulp is digested using aqua-regia (HCl:HNO3 in the ratio 3:1)
and the solution analyzed for U3O8 wt% using
ICP-OES.F





Bulk Dry Density Sampling





In addition,
samples are routinely collected from mineralized intersections for
bulk dry density determination as required for mineral resource
estimation. Density samples are typically collected at a frequency
of one density sample per 10 assay samples (i.e. 1 sample for every
5 metre interval), also ensuring the density samples are
representative of the uranium grade range and the different domains
of the deposit. The density samples comprise half-split core over
10 centimetre intervals, and for each sample, the depth, rock type
and gamma scinitllometre reading is recorded. The samples are sent
to the SRC Lab for analysis along with the mineralized core samples
for assay. At the SRC Lab, the density samples are first weighed as
received and then submerged in de-ionized water and re-weighed. The
samples are then dried until a constant weight is obtained. The
sample is then coated with an impermeable layer of wax and weighed
again while submersed in de-ionized water. Weights are entered into
a database and the bulk density of each sample is calculated. Water
temperature at the time of weighing was also recorded and used in
the bulk density calculation. Following bulk density determination,
the samples are sent for uranium assay using SRC Lab’s
ISO/IEC 17025:2005 accredited method for the determination of
U3O8 wt% in order to
ensure a direct correlation can be made between density and assay
values.





Exploration Samples





Three other types
of drill core samples are collected during routine exploration, the
results of which are used to prioritize drill holes for follow-up
exploration or determine geochemical and/or alteration vectors
toward mineralization, as follows:





1.
 Composite geochemical samples
are collected over approximately 10 metre intervals in the upper
Athabasca sandstone and in fresh lithologies beneath the
unconformity (basement) and over 5 metre intervals in the basal
sandstone and altered basement units. The samples consist of 1
centimetre to 2 centimetres disks of core collected at the top or
bottom of each row of core in the box over the specified interval.
Care is taken not to cross lithological contacts or stratigraphic
boundaries. These samples are submitted to the SRC Lab for sample
preparation and multi-element analysis. The same sample preparation
procedures are used as described above for U3O8 assay samples.
The pulps are analyzed using the ICPMS Exploration Package which
includes a total digest (HF:HNO3:HCIO4) and partial
digest (HNO3:HCl) followed by
ICP-MS analysis. Boron values are obtained through NaO2/NaCO3 fusion followed
by ICP-OES.





2.
 Representative/systematic
core disks (one to five centimetres in width) are collected at
regular 5 metre to 10 metre intervals throughout the entire length
of core until basement lithologies become unaltered. These samples
are analyzed for clay minerals using reflectance spectroscopy.
Samples for reflectance clay analyses are analyzed by Denison using
an ArcSpectro FT-NIR ROCKET spectrometer and sent to AusSpec
International Ltd. (AusSpec) for interpretation.





2017 Annual Information Form   
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3.
 Select spot samples are
collected from significant geological features (i.e. radiometric
anomalies, structure, alteration etc.). Core disks 1 to 2
centimetres thick are collected for reflectance spectroscopy and
split core samples are collected for geochemical analysis. The same
reflectance spectrometry or geochemical procedures as described
above are used.





These sampling
types and approaches are typical of uranium exploration and
definition drilling programs in the Athabasca Basin.





Data Handling





After the
analyses are completed, analytical data are securely sent using
electronic transmission of the results, by the SRC Lab to Denison.
The electronic results are secured using WINZIP encryption and
password protection. These results are provided as a series of
Adobe PDF files containing the official analytical results
(“assay certificates”) and a Microsoft Excel
spreadsheet file containing only the analytical results. Analytical
data received from the lab is imported directly into
Denison’s DH Logger database. The data is subject to
validation using triggers built into the database to identify blank
or standard assays that fall outside the accepted limits that
require re-analysis. Field duplicates are validated using control
charts. The laboratory is notified immediately of any problematic
samples or batches and these are re-analyzed. Assay values that
fall below the method detection limit (MDL) are reported by the lab
as ‘less than’ values (<MDL). These values are
automatically replaced by half MDL by the database during import.
The database is backed up on- and off-site every day.





QAQC





The SRC Lab has
an internal QAQC program dedicated to active evaluation and
continual improvement in the internal quality management system.
The laboratory is accredited by the Standards Council of Canada as
an ISO/IEC 17025 Laboratory for Mineral Analysis Testing and is
also accredited ISO/IEC 17025:2005 for the analysis of
U3O8.
The laboratory is licensed by the Canadian Nuclear Safety
Commission (CNSC) for possession, transfer, import, export, use,
and storage of designated nuclear substances by CNSC Licence Number
01784-1-09.3. As such, the laboratory is closely monitored and
inspected by the CNSC for compliance. All analyses are conducted by
the SRC Lab, which has specialized in the field of uranium research
and analysis for over 30 years. The SRC Lab is an independent
laboratory, and no associate, employee, officer, or director of
Denison is, or ever has been, involved in any aspect of sample
preparation or analysis on samples. The SRC Lab uses a Laboratory
Management System (LMS) for Quality Assurance. The LMS operates in
accordance with ISO/IEC 17025:2005 (CAN-P-4E) “General
Requirements for the Competence of Mineral Testing and Calibration
Laboratories” and is also compliant to CAN-P-1579
“Guidelines for Mineral Analysis Testing Laboratories”.
The laboratory continues to participate in proficiency testing
programs organized by CANMET (CCRMP/PTP-MAL).





The SRC Lab
routinely inserts standard reference materials and blanks into
batches of the Company’s samples as an internal check on
accuracy and contamination. Quality control samples (reference
materials, blanks, and duplicates) are included with each
analytical run, based on the rack sizes associated with the method.
Before the results leave the laboratory, the standards, blanks, and
split replicates are checked for accuracy, and issued provided the
senior scientist is fully satisfied. If for any reason there is a
failure in an analysis, the sub-group affected will be re-analyzed,
and checked again.





2017 Annual Information Form   
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A Corrective
Action Report will be issued and the problem is investigated fully
to ensure that any measures to prevent the re-occurrence can and
will be taken. All human and analytical errors are, where possible,
eliminated. If the laboratory suspects any bias, the samples are
re-analyzed and corrective measures are taken.





Denison
has developed several QA/QC procedures and protocols for all
exploration projects to independently monitor laboratory
performance which include the analysis of uranium standards,
blanks, field duplicates and exploration standards, as
follows:





Uranium
Standards - Due to the
radioactive nature of the standard material, insertion of the
standard materials is preferable at the SRC Lab instead of in the
field. During sample processing, the appropriate standard grade is
determined, and an aliquot of the appropriate standard is inserted
into the analytical stream for each batch of materials assayed.
Uranium standards are typically inserted at a minimum rate of 1 in
every 40 samples. For the Wheeler River project, Denison uses
standards provided by Joint Venture partner Cameco for uranium
assays. Six Cameco uranium assay standards have been prepared for
use in monitoring the accuracy of uranium assays received from the
laboratory. For other Denison projects a suitable matrix-matched
Certified Reference Material (“CRM”) is used as a
standard.





Blanks
- Denison employs a lithological blank
composed of quartzite to monitor the potential for contamination
during sampling, processing, and analysis. The selected blank
consists of a material that contains lower contents of
U3O8
than the sample material but is still
above the detection limit of the analytical process. Due to the
sorting of the samples submitted for assay by the SRC Lab based on
radioactivity, the blanks employed must be inserted by the SRC Lab
after this sorting takes place, in order to ensure that these
materials are ubiquitous throughout the range of analytical grades.
In effect, if the individual geologists were to submit these
samples anonymously, they would invariably be relegated to the
minimum radioactive grade level, preventing their inclusion in the
higher radioactive grade analyses performed by the SRC Lab. Blanks
are typically inserted at a minimum rate of 1 in every 40 samples.
For the Wheeler River project, Denison uses blanks provided by
Joint Venture partner Cameco. For other Denison projects other
suitable blank material is used, as provided by the SRC
Lab.





Field
Duplicates - The Company
inserts duplicate samples in the sample stream as a check on the
precision of the SRC Lab. Core duplicates are prepared by
collecting a second sample of the same interval, through splitting
the original sample, or other similar technique, and are submitted
as an independent sample. Duplicates are typically submitted at a
minimum rate of one per 25 samples. The collection may be further
tailored to reflect field variation in specific rock types or
horizons.





Exploration
Standards – Denison has
prepared three in-house ‘exploration standards’ to
independently monitor laboratory performance during the processing
of routine drill core exploration samples. These standards aim to
test laboratory accuracy and precision for a variety of trace
metals at low levels, as required for Athabasca uranium
exploration.





Assay Checks
– In addition to the QAQC
described above, Denison sends one in every 25 U3O8
assay samples to the SRC Lab’s
Delayed Neutron Counting (DNC) laboratory, a separate facility
located at the SRC Lab in Saskatoon, to compare the uranium values
using two different methods, by two separate laboratories. All
radioactive samples are monitored and recorded as per CNSC licence
01784-1-09.0. Furthermore, down hole radiometric probe results
provide equivalent uranium data (eU3O8)
that is used internally by the Company for comparisons with the SRC
Lab U3O8
results.





2017
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Form         
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Data Verification





Denison
engages with independent consultants for estimation of mineral
resources on its mineral properties in accordance with CIM
Definition Standards (2014) in National Instrument 43-101 –
Standards of Disclosure for Mineral Projects (“NI
43-101”). In this regard, the independent consultants
undertake rigorous data verification including, but not limited to,
Denison’s field procedures, databases and assay
results.





Prior to public disclosure of drilling results,
including preliminary radiometric equivalent grades
("eU3O8")
and chemical assay grades ("U3O8"),
the results are subject to data verification by Qualified Persons
employed by Denison. This includes checks of 10 to 20% of the
results (typically as composited intervals) against non-composited
eU3O8 determinations and laboratory assay
certificates.





DENISON’S OPERATIONS





McClean Lake Mill





The MLJV owns a
state of the art uranium processing facility located on the eastern
edge of the Athabasca Basin in northern Saskatchewan, approximately
750 kilometres north of Saskatoon. Orano Canada is the
operator/manager of the facility.





The McClean Lake
mill is specially designed and constructed to process high grade
uranium ores in a safe and environmentally responsible manner. The
mill uses sulphuric acid and hydrogen peroxide leaching and a
solvent extraction recovery process to extract and recover the
uranium product from the ore. In addition to the mill facility,
other infrastructure on the site includes a sulphuric acid plant, a
ferric sulphate plant, an oxygen plant, an electricity transmission
line tied into the provincial power grid, a 14 megawatt back-up
diesel power plant, warehouses, shops, offices and living
accommodations for site personnel.





In 2016, mill
expansion, construction and licensing were completed and the
licensed production capacity of the mill was increased to 24
million pounds U3O8 per year. This
increased licensed capacity allowed for the processing of 100% of
ore production from the Cigar Lake mine, expected to be 18 million
pounds U3O8 per year, and the
flexibility to mill ore from other sources.





Operations





The McClean Lake
mill began production of uranium concentrates in 1999, with the
first ore fed to the mill on June 22, 1999 and commercial
production achieved on November 1, 1999. The mill operated until
the end of June 2010, producing approximately 50 million pounds
U3O8, when it was
placed on stand-by due to a lack of ore. In 2014, the McClean Lake
mill re-commenced operations with the delivery of ore shipments
from the Cigar Lake Mine, owned by the CLJV and operated by Cameco.
In 2014, the mill processed over 456,800 pounds of U3O8 with a 97.5%
recovery rate. Mill feed consisted of a blend of Cigar Lake ores
and stockpiled Sue B and McClean Lake North ores (mined via SABRE).
In 2015, production ramped up and the mill produced approximately
11.3 million pounds of U3O8 with a 98.9%
recovery rate.





In 2016, the mill
produced 17.3 million pounds of U308 with a 99%
recovery, and mill feed was all Cigar Lake ore. In 2017, the mill
produced 18.0 million pounds of U3O8 with 99.1%
recovery, processing 100% mill feed from Cigar Lake. While mill
personnel continue to refine operational practices and procedures
to further improve performance, overall mill performance included
no major upsets in the areas of safety, the environment or
production. The table below shows the operating statistics for
McClean Lake over the last five years.








2017
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Form         
74








McClean Lake Operations
2017
2016
2015
2014
2013Ore Milled
(thousand tonnes)
36,374
36,682
24,912
8.4
-Average Grade (%
U3O8)
22.78
21.39
20.61
2.85
-MLJV Production
(thousand pounds U3O8)
-
-
10.7
112.4
-Denison’s
share MLJV Production (thousand pounds U3O8)
-
-
2.4
25.3
-Toll Mill
Production (thousand pounds U3O8)
18,015
17,333
11,294
344.4
-








For information
pertaining to taxes and royalties, see “Government Regulation
– Saskatchewan Royalties” and “Government
Regulation – Canadian Income and Other
Taxes.”





Mill Licence





The McClean Lake
site is operated under various permits, licences, leases and claims
granted and renewed from time to time, all of which are currently
in good standing. Several key regulatory achievements were
completed in 2017 for McClean Lake: (a) the issuance by the CNSC of
a 10 year license for operation of both McClean and Midwest
projects; (b) the receipt of renewal of provincial approvals to
operate for a 6 year term, expiring on October 31, 2023; and (c)
CNSC approval to expand the existing tailings facility up to an
elevation of 448m ASL. Historically CNSC issued Mine Operating
Licences were granted for a 5 year term, but in 2009 the McClean
Lake operations received an 8 year term and in 2017 was granted a
further 10 year term: UMOL-MINEMILL-McLEAN.00/2017 (the
“Mine Operating
License”) which is valid for the period July 1,
2017 to June 30, 2027. In addition to renewal of all previously
licensed activities, the current licence authorizes mining of the
McClean North deposits using hydraulic borehole mining methods
(SABRE) and includes the care and maintenance activities at the
Midwest site.





Tailings Disposal





The disposal of
mill tailings in an environmentally acceptable manner has led to
advances in the design and construction of new tailings management
facilities. In the TMF, tailings are deposited sub-aqueously in a
paste form from a barge. This procedure minimizes tailings
segregation, eliminates concerns of freezing and dust generation,
and controls radiation and radon emissions from the pond. This
facility has been designed to receive tailings from processing high
grade Midwest and Cigar Lake ores in addition to tailings from the
McClean Lake deposits.





Under the
regulatory approved TMF Optimization project, the tailings capacity
of the TMF is being increased in two stages. In 2013, the first
phase of the TMF Optimization project was completed which involved
the sloping of the TMF walls and the placement of a bentonite liner
to increase the TMF capacity elevation. The second phase of the TMF
Optimization project is designed to further increase the TMF
capacity elevation to 434 metres above sea level
(“m ASL”).





A second project,
called TMF Expansion, entails adding an additional 4.5 million
cubic metres of tailings capacity over and above that created
through the TMF Optimization project. The full scope of this
project envisions the TMF capacity elevation being increased to an
elevation of 448 m ASL, over a number of stages along with a larger
surface footprint. On April 19, 2017, the MLJV received regulatory
approvals for the TMF expansion project. Following receipt of
regulatory approvals, construction activities (of both TMF
optimization and expansion) was initiated with the installation of
a new tailings pipe bench, decommissioning of 12 dewatering wells
and the relocation of the contaminated landfill from the TMF to the
Sue C site. In 2018, work is expected to continue with the
re-sloping of the pit walls and placement of a 4m lift of the
bentonite liner.








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Form         
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Cigar Lake Toll Milling





In 2002, Denison
and its partners entered into an agreement with the CLJV to process
Cigar Lake ore at the McClean Lake mill. Pursuant to that
agreement, all Cigar Lake ore was to be leached at the McClean Lake
mill with the pregnant aqueous solution being divided between the
McClean Lake and Rabbit Lake facilities for processing into uranium
concentrates. In order to process this Cigar Lake ore, an expansion
of the McClean Lake mill was required. The expansion and
modifications of the McClean Lake mill to raise its capacity to
13.0 million pounds U3O8 were completed in
2008 and all costs were paid for by the CLJV.





As a result of
delays in the startup of the Cigar Lake mine and the exhaustion of
permitted ore deposits at McClean Lake, the McClean Lake mill was
placed on stand-by at the end of June of 2010. Under the Cigar Lake
toll milling agreement, the CLJV funded a considerable portion of
the McClean Lake stand-by costs, with the relative proportion of
the stand-by costs paid by each party calculated on the basis of
the percentage of mineral reserves between the McClean Lake and
Cigar Lake joint ventures.





In 2011, the CLJV
and the MLJV agreed to amend the toll milling agreement. Under the
new milling arrangement, the McClean Lake operation is expected to
process and package 100% of the uranium produced from the Cigar
Lake mine. To accommodate the annual production of 18.0 million
pounds U3O8 from the CLJV,
the mill has been further expanded to an annual licensed capacity
of 24.0 million pounds U3O8. All costs for
the expansion of the McClean Lake mill and a portion of the TMF
Optimization and TMF Expansion (See “Denison’s
Operations - McClean Lake - Tailings Disposal”) are paid for
by the CLJV.





Cigar Lake Toll Milling – APG Transaction





Pursuant to the
APG Transaction in February 2017, certain of Denison’s
interests in the Cigar Lake toll milling proceeds have been sold to
APG and its subsidiary Centaurus Royalties Ltd.
(“Centaurus”)
for aggregate gross proceeds to Denison of $43,500,000. The APG
Transaction is comprised of the following elements: (1) a 13 year
limited recourse lending arrangement involving a loan from APG to
9373721 Canada Inc. (“SPV”) (the “APG Loan”) and a further loan from
SPV to DMI (the “SPV
Loan”) each for $40,800,000 (collectively, the
“Lending
Arrangement”); and (2) $2,700,000 in proceeds from the
sale, to Centaurus, of a stream equal to Denison’s 22.5%
share of proceeds from the toll milling of Cigar Lake ore by the
McClean Lake mill for specified Cigar Lake toll milling throughput
in excess of 215 million pounds U3O8 after July 1,
2016 (the “Stream
Arrangement”).





Additional
details of the APG Transaction are as follows:





●
 No Warranty of the Future
Rate of Production - No warranty is provided by Denison (including
DMI and SPV) to APG (including Centaurus), under the terms of the
Lending Arrangement or the Stream Arrangement, regarding: the
future rate of production at the Cigar Lake mine and / or the
McClean Lake mill; or the amount or collectability of proceeds to
be received by the MLJV in respect of toll milling of Cigar Lake
ore.


●
 APG Loan Details - The APG
Loan will accrue interest at a rate of 10% per annum and does not
have a predetermined principal repayment schedule. The APG Loan is
secured by a first priority interest in the assets of SPV which
will essentially consist of the SPV Loan to DMI.





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●
 SPV Loan Details - The SPV
Loan will accrue interest at a rate of approximately 10% per annum
and does not have a predetermined principal repayment schedule. The
SPV Loan is limited in its recourse against DMI such that it is
generally repayable only to the extent of Denison’s share of
the toll milling revenues earned by the MLJV from the processing of
the first 215 million pounds of U308 from Cigar Lake ore on or
after July 1, 2016. Denison will guarantee the limited recourse
loan repayments and will grant a second ranking pledge of its share
of DMI to secure performance by DMI of its obligations to pay the
SPV Loan. The share pledge is second ranking to Denison’s
existing pledge of its shares of DMI to the Bank of Nova Scotia
(“BNS”) under
the terms of its Letters of Credit Facility.





Surface Access Borehole Resource Extraction (SABRE) Mining
Program





The SABRE program
is focused on developing a viable alternate mining method combining
surface drilling and borehole mining technology. Benefits of the
method may include a reduced time to production, reduced or
deferred capital costs, as well as minimizing safety and
environmental risks.





Hydraulic
borehole mining is a technique used to extract materials through a
small access borehole, typically less than one-half of a metre in
diameter, resulting in a very small disturbance to the surface. A
mining tool containing a high-pressure water jet nozzle is lowered
through the access borehole in the overburden and sandstone to the
mineralized horizon. The high-pressure water jet is used to cut or
erode the mineral-bearing ore and to create a cavity up to four
metres in diameter. The cuttings are transported to surface in a
slurry form and sent through a series of screens and settling ponds
to separate the ore from the jetting water. Jetting water is
filtered further and re-used in the process. Each mined out cavity
is backfilled after completion with a cemented mixture in the
mineralized horizon.





Between 2007 and
2012, approximately 2,100 tonnes of ore was recovered through
various SABRE test mining programs, a portion of which has been fed
to the mill between 2007 and 2014. After the completion of several
significant milestones in 2012 and 2013, a decision was made in
late 2013 to suspend the SABRE program in 2014 in response to the
low uranium price environment. In 2015, SABRE activities were
limited to patent applications and upgrading down-hole sonar
capabilities with the objective of improving surveying of cavity
dimensions and mining performance. In 2016, an expanded program was
evaluated for SABRE including the re-tooling of the program to
allow for larger volumes and jetting pressures designed to increase
the SABRE production rate. In addition, the purchase, installation
and testing of a new solid / liquid separation system was completed
to assess the improvement in recovery of small uranium particles
from the production slurry creating during the SABRE mining
process.





In 2017,
development of the re-tooled SABRE program continued with
engineering of larger diameter mining pipes, procurement of high
pressure pumps and a tendering process to contract drilling
equipment and labour for a further mining test.





In 2018 it is
expected that the access boreholes will be drilled and cased to
depth in preparation for test mining activities at McClean North in
2019. Additional engineering, followed by fabrication, will be
completed for the mining pipes and drill assembly.




















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MANAGER OF UPC





DMI is the
manager of UPC. UPC is a public company with the primary investment
objective of achieving an appreciation in the value of its uranium
holdings. The Company does not, directly or indirectly, have an
ownership interest in UPC. As manager, DMI provides UPC’s
officers and manages UPC's activities, including purchasing uranium
for and on behalf of UPC as directed by the UPC board, arranging
for its storage and attending to regulatory reporting for
UPC.





The MSA is the
current management services agreement between DMI and UPC,
effective April 1, 2016. Under the MSA, DMI will receive the
following management fees from UPC: a) a base fee of $400,000 per
annum, payable in equal quarterly installments; b) a variable fee
equal to (i) 0.3% per annum of UPC’s total assets in excess
of $100 million and up to and including $500 million, and (i) 0.2%
per annum of UPC’s total assets in excess of $500 million; c)
a fee, at the discretion of the UPC board, for on-going monitoring
or work associated with a transaction or arrangement (other than a
financing, or the acquisition of or sale of U3O8 or UF6); and d) a
commission of 1.0% of the gross value of any purchases or sales of
U3O8 or UF6, or gross
interest fees payable to UPC in connection with any uranium loan
arrangements. The MSA has a three-year term and may be terminated
by either party upon the provision of 120 days written
notice.





During 2017, DMI
earned an aggregate of USD$1,397,000 in total management fees as
manager of UPC.





DENISON ENVIRONMENTAL SERVICES





DES was formed in
1997 to provide mine decommissioning and mine care and maintenance
services to industry and government, as well as to manage
Denison’s post mine closure environmental obligations on its
Elliot Lake landholdings. DES's current focus is on post-closure
mine care and maintenance services and the majority of DES’s
revenue comes from such services. DES is headquartered in Elliot
Lake, Ontario.





The primary
activities of DES in 2017 include: providing the ongoing monitoring
of Denison’s two closed Elliot Lake mine sites as well as
environmental monitoring, effluent treatment and maintenance
services for several clients including:





●
 Rio Algom Ltd.’s five
closed Elliot Lake mines;


●
 Yukon Government’s Mt.
Nansen Mine in the Yukon;


●
 BHP Billiton’s closed
base metal mine at Les Mines Selbaie in Quebec; and


●
 Ontario Government’s
closed Kam Kotia Mine in northern Ontario.





In 2017, DES also
carried out work on several other smaller contracts.





ENVIRONMENTAL, HEALTH AND SAFETY MATTERS





The Company has
adopted an Environmental, Health and Safety Policy (the
“EHS Policy”)
that affirms Denison’s commitment to environmentally
responsible management and compliance with occupational health and
safety laws. Under the EHS Policy, the Company has committed to run
its operations in compliance with applicable legislation, in a
manner that minimizes the impact on our ecosystem. The EHS Policy
mandates the use of regular monitoring programs to identify risks
to the environment, to the public and to Denison’s employees
and to ensure compliance with regulatory requirements. The EHS
Policy also sets out Denison’s requirement to train its
employees regarding environmental and health and safety compliance
and best practices and to provide adequate resources in this
regard.





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The EHS Policy
requires regular reporting to the Board regarding the
Company’s compliance and the results of the Company’s
monitoring. To assist the Board with its responsibilities in
overseeing environmental, health and safety matters, the Board has
established the Environment, Health and Safety (the
“EHS Committee”)
which works with management to discuss matters affecting the
environment, health and safety and its stakeholders and reporting
and making recommendations to the Board.





Canada





McClean Lake





At McClean Lake,
which is operated by Orano Canada, final portions of the mill
expansion were completed in early 2017 and all construction
personnel, equipment and facilities were demobilized from the site.
Toll milling activities for Cigar Lake ores continued throughout
the year. During 2017 there were five reportable safety incidents
including four medical incidents. Environmentally there were 5
reportable environmental incidents, all of which were minor in
nature and have been successfully remediated with no lasting
impacts. The facility has maintained its internationally recognized
ISO 14001:2004 and OHSAS 18001 certification.





The McClean Lake
and Midwest projects are combined under a single Operating License
issued by the CNSC. The combined Preliminary Closure Plan was
prepared by Orano Canada and approved by the authorities in 2016,
estimating the total decommissioning and reclamation costs for both
projects to be $107,241,000. Financial assurances are in place for
this entire amount, with Denison’s share being
$24,135,000.





Elliot Lake





Denison's uranium
mine at Elliot Lake, Ontario, which started operations in 1957, was
permanently closed upon completion of deliveries of U3O8 to Ontario Hydro
in May 1992. During its 35 years of continuous operation, the
facility produced 147 million pounds of U3O8 in concentrates
from the milling of 70 million tons of ore.





By 1998, all
significant capital reclamation activities at Denison's two closed
Elliot Lake mines had been completed and, for the most part,
decommissioning has progressed to the long-term monitoring
phase.





During 2017, the
water treatment plants operated as planned and all environmental
targets were met. Monitoring and other remediation related expenses
were $814,000 for the year. Monitoring costs for 2018 are budgeted
to be $751,000. All expenditures are funded from the Reclamation
Trust described below. It is estimated that sufficient funds are in
the Reclamation Trust to meet all monitoring costs through
2023.





All activities
and monitoring results are reviewed regularly by the CNSC and the
Elliot Lake Joint Regulatory Group, which consists of federal and
provincial regulators.





Pursuant to a
Reclamation Funding Agreement, effective June 30, 1994, with the
Governments of Canada and Ontario, Denison has established a
Reclamation Trust from which all spending on its Elliot Lake
reclamation activities is funded. When the Reclamation Trust was
first established in 1994, Denison was required to deposit 90% of
its cash receipts after deducting permitted expenses, as defined in
such agreement, into the Reclamation Trust.





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In 1997, the
Governments of Canada and Ontario agreed to suspend the 90% funding
requirement provided Denison maintained four years of cash
requirements in the Reclamation Trust. Early in 1999, the
Governments of Canada and Ontario agreed to further amend the
Reclamation Funding Agreement, effective when Denison received an
amended site decommissioning licence, which was obtained on April
22, 1999. Pursuant to that amendment, Denison is required to
maintain sufficient funds in the Reclamation Trust to meet six
years of cash requirements.





The CNSC has
proposed the modification of the licences for Elliot Lake to a
single Waste Facility Operating Licence for both facilities (see
“Government Regulation – Canadian Uranium
Industry”). Under the proposed Waste Facility Operating
Licence, the reclamation funding arrangement may be modified, but
at this point in time the Company believes that it will be able to
maintain the current funding agreement.





Denison Environmental Services





DES has
maintained its internationally recognized ISO 9001:2008
certification which is a certification for Quality Management
Systems (“QMS”). DES is currently in the process of
updating the QMS to meet ISO 9001:2015 certification requirements.
In 2017, DES had no lost time incidents and only one medical aid
injury.





Exploration





The Denison
exploration group in Saskatchewan had two lost time incidents, one
safety incident and several minor medical aids in 2017. One lost
time incident involved an employee of a contractor performing work
for Denison, whose hand was electrocuted while handling electrical
lines in part due to a failure to follow the contractor’s
operating procedures.





There were no
environmental incidents or accidents in 2017. All required permits
were obtained, and the exploration sites were remediated for any
environmental impacts as required.





GOVERNMENT REGULATION





Saskatchewan Exploration and Land Tenure





In Canada,
natural resource exploration and land tenure activity fall under
provincial legislative jurisdiction. In Saskatchewan, the
management of mineral resources and the granting of exploration and
mining rights for mineral substances and their use are regulated by
the Crown Minerals Act
(Saskatchewan) and The Mineral
Tenure Registry Regulations, 2012, that are administered by
the Saskatchewan Ministry of Energy and Resources.





The right to
explore for minerals in Saskatchewan is acquired under a mineral
claim from the province. The initial term of a mineral claim is two
years, renewable for successive one–year periods, provided
the mineral claim is in good standing. To maintain a mineral claim
in good standing, generally, the holder of a mineral claim must
expend a prescribed amount on exploration. Excess expenditures
(also known as assessment credits) can be applied to satisfy
expenditure requirements for future claim years. Except for
exploration purposes, a mineral Claim does not grant the holder the
right to mine minerals. A holder of a mineral claim in good
standing has the right to convert a mineral claim into a mineral
lease. Surface exploration work on a mineral claim requires
additional governmental approvals.





The right to mine
minerals in Saskatchewan is acquired under a mineral lease from the
province. A mineral lease is for a term of 10 years, with a right
to renew for successive 10-year terms in the absence of default by
the lessee. The lessee is required to spend certain amounts for
work during each year of a mineral lease.





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A mineral lease
cannot be terminated except in the event of default and for certain
environmental concerns, as prescribed in The Crown Minerals Act (Saskatchewan).
However, mineral leases may be amended unilaterally by the lessor
by amendment to The Crown Minerals
Act (Saskatchewan) or The
Crown Mineral Royalty Regulations, 2013
(Saskatchewan).





Mineral rights,
held through mineral claims and mineral leases, are distinct from
surface rights. The surface facilities and mine workings are
located on lands owned by the province of Saskatchewan. The right
to use and occupy lands is acquired under a surface lease from the
province of Saskatchewan. A surface lease is for a period of time,
up to a maximum of 33 years, as is necessary to allow the lessee to
operate its mine and plant and thereafter carry out the reclamation
of the lands involved. Surface leases are also used by the province
of Saskatchewan as a mechanism to achieve certain environmental and
radiation protection and socio-economic objectives, and contain
certain undertakings in this regard.





Environmental Assessments





The assessment of
a proposed uranium project in Saskatchewan involves both a
provincial and federal assessment. In Saskatchewan, the assessment
of a project with joint federal and provincial jurisdiction is
coordinated through established protocols in order to align with
the “one project-one assessment” model for the
proponent and the public without compromising any statutory
requirements of the legislation of either
jurisdiction.





In the province
of Saskatchewan, the Environmental
Assessment Act is administered by the Ministry of
Environment (MOE). The level of assessment for mining projects is
dependent on the specific characteristics of each individual
project. A proponent of a project that is considered to be a
“development” pursuant to the Saskatchewan Environmental Assessment Act, is
required to conduct an environmental impact assessment (EIA) of the
proposed project and prepare and submit an environmental impact
statement (EIS) to the Minister of Environment.





Federally, the
Canadian Environmental Assessment
Act (CEAA) was amended in the spring of 2012 and the
Regulations Designating Physical
Activities (2012) were established to clarify when a federal
EIA is required and define what federal agency is required to be
the “responsible authority” for the conduct of the EIA.
For uranium projects, the CNSC is designated as the
“responsible authority” under the CEAA and carries full
authority to complete the screening of the proposed project and any
subsequent environmental assessments.





Under the CEAA,
an EIA focuses on potential adverse environmental effects that are
within federal jurisdiction including: (a) fish and fish habitat
and other aquatic species; (b) migratory birds; (c) federal lands;
(d) effects that cross provincial or international boundaries; (e)
effects that impact on aboriginal peoples, such as their use of
lands and resources for traditional purposes, and (f) changes to
the environment that are directly linked to or necessarily
incidental to any federal decisions about a project.





The Government of
Canada is in the process of finalizing a new Impact Assessment Act
(the “IAA”), to replace the CEAA. It is expected that
the new IAA will introduce substantial changes to decision-making
for designated projects. The potential impacts of this change for
Denison and the uranium industry overall are not yet
known.





Environmental
matters related to the McClean Lake uranium facility and the
Midwest project are regulated by the CNSC and the Saskatchewan
Ministry of Environment.





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A number of other
ministries and departments of the federal and Saskatchewan
governments also regulate certain aspects of the operation. Prior
to proceeding with development of the McClean Lake uranium facility
and Midwest project, the proponents were required to submit
Environmental Impact Statements for review. After completion of
that review and receipt of recommendations, the federal and
Saskatchewan governments issued the appropriate initial
authorizations, subject to the normal licensing renewal process,
for the McClean Lake uranium facility in 1995 and for Midwest in
2012.





For
Denison’s Wheeler River property, preliminary baseline data
collection is in progress with respect to the assessment of
potential environmental impacts. From a regulatory perspective, the
project will require completion of a federal and provincial
environmental assessment, to be completed as a joint environmental
assessment. It is currently estimated the assessment will require
approximately 24 to 36 months to complete following the submission
of a detailed project description.





Licensing and Permitting





The federal
government recognizes that the uranium industry has special
importance in relation to the national interest and therefore
regulates the mining, extraction, use and export of uranium under
the Nuclear Safety and Control
Act (“NSCA”). The NSCA is administered
by the CNSC which issues licences pursuant to the regulations under
the NSCA.





In the event
environmental assessment approvals by both the provincial and
federal governments are granted, a project will be allowed to
proceed to the second tier of approvals for licenses. The federal
(CNSC) licensing process requires the submission of detailed
engineering design packages as well as detailed management plans
for all facets of the operation as part of their licensing process.
The federal licenses are typically the license (i) to prepare a
site and construct, (ii) operate, (iii) decommission, and (iv)
abandon.





Activities at
McClean Lake and Midwest are currently carried out under a single
operating license issued by the CNSC and are subject to all
applicable federal statutes and regulations and to all laws of
general application in Saskatchewan, except to the extent that such
laws conflict with the terms and conditions of the licences or
applicable federal laws.





Decommissioning
activities at Elliot Lake are currently carried out under two
decommissioning licences issued by the CNSC, one for the Stanrock
tailings area and one for the Denison mine site and tailings areas.
Decommissioning of the facilities pursuant to the terms of the
decommissioning licences has been completed. The CNSC has initiated
the actions to combine the Stanrock and Denison sites under one
Waste Facility Operating Licence. There are no significant
differences between the different forms of licences. After a
lengthy period of care, maintenance and monitoring, Denison may
apply to the CNSC for permission to abandon the sites.





Saskatchewan Royalties





The province of
Saskatchewan imposes royalties on the sale of uranium extracted
from ore bodies in the province in accordance with Part III of The
Crown Mineral Royalty Regulations (the “Regulations”) pursuant to The
Crown Minerals Act (the “Act”). Significant revisions to
the uranium royalty regime in Saskatchewan became effective on
January 1, 2013, and has three components:





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(i)
 Basic Royalty: Computed as 5%
of gross revenues derived from uranium extracted from ore bodies in
the province;


(ii)
 Saskatchewan Resource Credit:
Reduction in the basic royalty equal to 0.75% of gross revenues
derived from uranium extracted from ore bodies in the province;
and


(iii)
 Profit Royalty: Two-tier rate
structure, computed as 10% or 15% of net profits derived from the
mining and processing of uranium extracted from ore bodies in the
province.





Gross revenue,
for the Basic Royalty, is determined in accordance with the
Regulations and allows for reductions based on specified
allowances. Net profit, for the Profit Royalty, is calculated based
on the recognition of the full dollar value of a royalty
payer’s exploration, capital, production, decommissioning and
reclamation costs, in most cases, incurred after January 1, 2013.
Net profits will be taxed under the profit royalty at a rate of 10%
for net profits up to and including $22.00 per kilogram ($10 per
pound) of uranium sold, and at 15% for net profits in excess of
$22.00 per kilogram. The $22.00 per kilogram threshold is
applicable for 2013 (the base year) and is indexed in subsequent
years for inflation.





Under this
system, each owner or joint venture participant in a uranium mine
is a royalty payer. Individual interests are consolidated on a
corporate basis for the computation and reporting of royalties due
to the province.





Royalty payments
are due to the province on or before the last day of the month
following the month in which the royalty payer sold, or consumed,
the uranium for the purposes of the basic royalty, and quarterly
installments are required based on estimates of net profits in
respect of the profit royalty.





Canadian Income and Other Taxes





Denison and its
Canadian subsidiaries are subject to federal and provincial income
taxes. In 2017, taxable income was subject to federal taxes at a
rate of 15%, and provincial taxes in Saskatchewan, Ontario, Quebec,
British Columbia and the Yukon Territory at rates varying between
11% and 13.5%. Taxable income for each entity is allocated between
provinces and territories based on a two point average of the
proportion of salaries and revenues attributable to each province
or territory. Denison expects that it will not be liable for
Canadian income taxes on a current tax basis for the financial year
ended 2017. As a resource corporation in Saskatchewan, Denison is
also subject to a resource surcharge equal to 3% of the value of
resource sales from production in Saskatchewan, if any, during the
year.





In recent years,
including 2017, Denison has issued shares eligible for treatment as
“flow through shares”, as defined in subsection 66(15)
of the Income Tax Act
(Canada). As a result, a significant portion of Denison's Canadian
Exploration Expenditures have been renounced to shareholders and
are not available to Denison as a tax deduction in the current year
or future years.





Audit / Review by Taxing Authorities





From time to
time, Denison is subject to audit / review by taxing authorities.
In certain jurisdictions, periodic reviews are carried out by
taxing authorities in the ordinary course of business. Denison
cooperates with all requests received from taxing authorities, and
is not currently engaged in a material dispute with any of the
applicable taxing authorities.








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RISK FACTORS





Denison’s
business, the value of the Shares and management’s
expectations regarding the same are subject to known and unknown
risks, uncertainties and other factors that may cause the actual
results, level of activity, performance or achievements of Denison
to be materially different than anticipated. The following are
those risks, uncertainties and other factors pertaining to the
outlook and conditions currently known to Denison that have been
identified by the Company as having the potential to negatively
affect Denison’s business and the value of the Shares.
Current and prospective security holders of Denison should
carefully consider these risk factors. However, these factors are
not, and should not be construed as being exhaustive, and other
circumstances that are currently not foreseen by management of
Denison could arise to negatively affect Denison’s business
and its Shareholders.





Speculative Nature of Exploration and Development





Exploration for
minerals and the development of mineral properties is speculative,
and involves significant uncertainties and financial risks that
even a combination of careful evaluation, experience and knowledge
may not eliminate. While the discovery of an ore body may result in
substantial rewards, few properties which are explored are
commercially mineable or are ultimately developed into producing
mines. Major expenses may be required to properly evaluate the
prospectivity of an exploration property, to develop new ore bodies
and to estimate mineral resources and establish mineral reserves.
There is no assurance that the Company’s uranium deposits are
commercially mineable.





Imprecision of Mineral Reserve and Resource Estimates





Mineral reserve
and resourcefigures
are estimates, and no assurances can be given that the estimated
quantities of uranium are in the ground and could be produced, or
that Denison will receive the prices assumed in determining its
mineral reserves. Such estimates are expressions of judgment based
on knowledge, mining experience, analysis of drilling results and
industry best practices. Valid estimates made at a given time may
significantly change when new information becomes available. While
Denison believes that the mineral reserve and resourceestimates included are well
established and reflect management’s best estimates, by their
nature, mineral reserve and resource estimates are imprecise and
depend, to a certain extent, upon statistical inferences and
geological interpretations, which may ultimately prove inaccurate.
Furthermore, market price fluctuations, as well as increased
capital or production costs or reduced recovery rates, may render
mineral reserves and resources uneconomic and may ultimately result
in a restatement of mineral reserves and resources. The evaluation
of mineral reserves or resourcesis always influenced by economic
and technological factors, which may change over time.





Inability to Expand and Replace Mineral Reserves and
Resources





Denison’s
mineral reserves and resources at its McClean Lake, Midwest,
Wheeler River and Waterbury Lake projects are Denison’s
material future sources of uranium concentrates. Unless other
mineral reserves or resources are discovered, Denison’s
sources of future production for uranium concentrates will decrease
over time when its current mineral reserves and resources are
depleted. There can be no assurance that Denison’s future
exploration, development and acquisition efforts will be successful
in replenishing its mineral reserves and resources. In addition,
while Denison believes that many of its properties demonstrate
development potential, there can be no assurance that they can or
will be successfully developed and put into production or that they
will be able to replace production in future years.





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Economics of Developing Mineral Properties





Denison’s
current and future uranium production is dependent in part on the
successful discovery and development of new ore bodies and/or
revival of previously existing mining operations. It is impossible
to ensure that Denison’s current exploration and development
programs will result in profitable commercial mining operations.
Where the Company has been able to estimate the existence of
mineral resources and mineral reserves, substantial expenditures
will be required to establish economic feasibility for commercial
development and to obtain the required environmental approvals,
permitting and assets to commence commercial
operations.





The economic
feasibility of development projects is based upon many factors,
including, among others: the accuracy of mineral reserve and
resource estimates; metallurgical recoveries; capital and operating
costs of such projects; government regulations relating to prices,
taxes, royalties, infrastructure, land tenure, land use, importing
and exporting, and environmental protection; political and economic
climate; and uranium prices, which are historically cyclical.
Development projects are also subject to the successful completion
of engineering studies, issuance of necessary governmental permits
and availability of adequate financing.





Development
projects have no operating history upon which to base estimates of
future cash flow. Denison’s estimates of mineral reserves and
resources and cash operating costs are, to a large extent, based
upon detailed geological and engineering analysis. The decision as
to whether a property contains a commercial mineral deposit and
should be brought into production will depend upon the results of
exploration programs and/or feasibility studies, and the
recommendations of duly qualified engineers and/or geologists, all
of which involves significant expense. Economic analyses and
feasibility studies derive estimates of capital and operating costs
based upon many factors, including, among others: anticipated
tonnage and grades of ore to be mined and processed; the
configuration of the ore body; ground and mining conditions;
expected recovery rates of the uranium from the ore; and alternate
mining methods.





As at the date
hereof, the results of economic analyses for Denison's projects are
preliminary in nature and include inferred mineral resources, which
are considered too speculative geologically to have the economic
considerations applied that would enable them to be categorized as
mineral reserves. There is no certainty that any forecasts in an
economic analysis prepared by or for the Company would be
realizable or that any resources would ever be upgraded to
reserves. Mineral resources that are not mineral reserves do not
have demonstrated economic viability.





It is possible
that actual costs and economic returns of current and new mining
operations may differ materially from Denison’s best
estimates. It is not unusual in the mining industry for new mining
operations to experience unexpected problems during the start-up
phase, take much longer than originally anticipated to bring into a
producing phase, and to require more capital than anticipated. The
ability to sell and profit from the sale of any eventual mineral
production from a property will be subject to the prevailing
conditions in the applicable marketplace at the time of sale. The
demand for uranium and other minerals is subject to global economic
activity and changing attitudes of consumers and other
end-users’ demand. Many of these factors are beyond the
control of a mining company and therefore represent a market risk
which could impact the long term viability of Denison and its
operations.





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Benefits Not Realized From Transactions





Denison has
completed a number of transactions over the last several years,
including without limitation the acquisition of International
Enexco Ltd., the acquisition of Fission, the acquisition of JNR,
the sale of its mining assets and operations located in the United
States to Energy Fuels Inc., the sale of its interest in the GSJV,
the Africa Transaction, the optioning of the Moore Lake property to
Skyharbour, the acquisition of an 80% interest in the Hook-Carter
property from ALX, the acquisition of an interest in the Moon Lake
property from CanAlaska and entering into the APG Transaction.
Despite Denison’s belief that these transactions, and others
which may be completed in the future, will be in Denison’s
best interest and benefit the Company and Denison’s
shareholders, Denison may not realize the anticipated benefits of
such transactions or realize the full value of the consideration
paid or received to complete the transactions. This could result in
significant accounting impairments or
write-downs of the carrying values of mineral properties or other
assets and could adversely impact the Company and the price
of its Shares.





Volatility and Sensitivity to Market Prices





The long and
short term market prices of U3O8 affect the value
of Denison’s mineral resources and the market price of the
Shares. Historically, these prices have fluctuated and have been
and will continue to be affected by numerous factors beyond
Denison’s control. Such factors include, among others: demand
for nuclear power, political and economic conditions in uranium
producing and consuming countries, public and political response to
nuclear incidents, reprocessing of used reactor fuel and the
re-enrichment of depleted uranium tails, sales of excess civilian
and military inventories (including from the dismantling of nuclear
weapons) by governments and industry participants, uranium supplies
from other secondary sources, and production levels and costs of
production from primary uranium suppliers.





Public Acceptance of Nuclear Energy and Competition from Other
Energy Sources





Growth of the
uranium and nuclear power industry will depend upon continued and
increased acceptance of nuclear technology as a clean means of
generating electricity. Because of unique political, technological
and environmental factors that affect the nuclear industry,
including the risk of a nuclear incident, the industry is subject
to public opinion risks that could have an adverse impact on the
demand for nuclear power and increase the regulation of the nuclear
power industry. Nuclear energy competes with other sources of
energy, including oil, natural gas, coal and hydro-electricity.
These other energy sources are, to some extent, interchangeable
with nuclear energy, particularly over the longer term. Technical
advancements in, and historically large government subsidies for,
renewable and other alternate forms of energy, such as wind and
solar power, could make these forms of energy more commercially
viable and put additional pressure on the demand for uranium
concentrates. Sustained lower prices of alternate forms of energy
may result in lower demand for uranium concentrates.





Current estimates
project significant increases in the world’s nuclear power
generating capacities, primarily as a result of a significant
number of nuclear reactors that are under construction, planned, or
proposed in China, India and various other countries around the
world. Market projections for future demand for uranium are based
on various assumptions regarding the rate of construction and
approval of new nuclear power plants, as well as continued public
acceptance of nuclear energy around the world. The rationale for
adopting nuclear energy can be varied, but often includes the clean
and environmentally friendly operation of nuclear power plants, as
well as the affordability and round-the-clock reliability of
nuclear power. A change in public sentiment regarding nuclear
energy could have a material impact on the number of nuclear power
plants under construction, planned or proposed, which could have a
material impact on the market’s and the Company’s
expectations for the future demand for uranium and the future price
of uranium.





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Market Price of Shares





Securities of
mining companies have experienced substantial volatility in the
past, often based on factors unrelated to the financial performance
or prospects of the companies involved. These factors include
macroeconomic conditions in North America and globally, and market
perceptions of the attractiveness of particular industries. The
price of Denison's securities is also likely to be significantly
affected by short-term changes in commodity prices, other mineral
prices, currency exchange fluctuation, or changes in its financial
condition or results of operations as reflected in its periodic
earnings reports and/or news releases. Other factors unrelated to
the performance of Denison that may have an effect on the price of
the securities of Denison include the following: the extent of
analytical coverage available to investors concerning the business
of Denison; lessening in trading volume and general market interest
in Denison's securities; the size of Denison's public float and its
inclusion in market indices may limit the ability of some
institutions to invest in Denison's securities; and a substantial
decline in the price of the securities of Denison that persists for
a significant period of time could cause Denison's securities to be
delisted from an exchange. If an active market for the securities
of Denison does not continue, the liquidity of an investor's
investment may be limited and the price of the securities of the
Company may decline such that investors may lose their entire
investment in the Company. As a result of any of these factors, the
market price of the securities of Denison at any given point in
time may not accurately reflect the long-term value of Denison.
Securities class-action litigation often has been brought against
companies following periods of volatility in the market price of
their securities. Denison may in the future be the target of
similar litigation. Securities litigation could result in
substantial costs and damages and divert management's attention and
resources.





Dilution from Further Equity Financing





While active in
exploring for new uranium discoveries in the region,
Denison’s present focus is on advancing the Wheeler River
project to a development decision, with the potential to become the
next large scale uranium producer in Canada. Denison will require
additional funds to further such activities. If Denison raises
additional funding by issuing additional equity securities, such
financing would substantially dilute the interests of Shareholders
and reduce the value of their investment.





Reliance on Other Operators





At some of its
properties, Denison is not the operator and therefore is not in
control of all of the activities and operations at the site. As a
result, Denison is and will be, to a certain extent, dependent on
the operators for the nature and timing of activities related to
these properties and may be unable to direct or control such
activities.





As an example,
Orano Canada is the operator and majority owner of the McClean Lake
and Midwest joint ventures in Saskatchewan, Canada. The McClean
Lake mill employs unionized workers who work under collective
agreements. Orano Canada, as the operator, is responsible for most
operational and production decisions and all dealings with
unionized employees. Orano Canada may not be successful in its
attempts to renegotiate the collective agreements, which may impact
mill and mining operations. Similarly, Orano Canada is responsible
for all licensing and dealings with various regulatory authorities.
Any lengthy work stoppages, or disruption to the operation of the
mill or mining operations as a result of a licensing matter or
regulatory compliance, may have a material adverse impact on the
Company’s future cash flows, earnings, results of operations
and financial condition.





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Reliance on Contractors and Experts





In various
aspects of its operations, Denison relies on the services,
expertise and recommendations of its service providers and their
employees and contractors, whom often are engaged at significant
expense to the Company. For example, the decision as to whether a
property contains a commercial mineral deposit and should be
brought into production will depend in large part upon the results
of exploration programs and/or feasibility studies, and the
recommendations of duly qualified third party engineers and/or
geologists. In addition, while Denison emphasizes the importance of
conducting operations in a safe and sustainable manner, it cannot
exert absolute control over the actions of these third parties when
providing services to Denison or otherwise operating on
Denison’s properties. Any material error, omission, act of
negligence or act resulting in environmental pollution, accidents
or spills, industrial and transportation accidents, work stoppages
or other actions could seriously adversely affect the
Company’s operations and financial condition.





Property Title Risk





The Company has
investigated its rights to explore and exploit all of its material
properties and, to the best of its knowledge, those rights are in
good standing. However, no assurance can be given that such rights
will not be revoked, or significantly altered, to its detriment.
There can also be no assurance that the Company’s rights will
not be challenged or impugned by third parties, including the
Canadian, provincial and local governments, as well as by First
Nations and Métis.





There is also a
risk that Denison's title to, or interest in, its properties may be
subject to defects or challenges. If such defects or challenges
cover a material portion of Denison's property, they could
materially and adversely affect Denison's results of operations and
financial condition, its reported mineral reserves and resources or
its long-term business prospects.





Competition for Properties





Significant
competition exists for the limited supply of mineral lands
available for acquisition. Many participants in the mining business
include large established companies with long operating histories.
The Company may be at a disadvantage in acquiring new properties as
competitors may have greater financial resources and more technical
staff. Accordingly, there can be no assurance that the Company will
be able to compete successfully to acquire new properties or that
any such acquired assets would yield resources or reserves or
result in commercial mining operations.





Global Financial Conditions





Global financial
conditions continue to be subject to volatility arising from
international geopolitical developments and global economic
phenomenon, as well as general financial market turbulence. Access
to public financing and credit can be negatively impacted by the
effect of these events on Canadian and global credit markets. The
health of the global financing and credit markets may impact the
ability of Denison to obtain equity or debt financing in the future
and the terms at which financing or credit is available to Denison.
These increased levels of volatility and market turmoil could
adversely impact Denison's operations and the trading price of the
Shares.





Ability to Maintain Obligations under Credit Facility and Other
Debt





Denison is
required to satisfy certain financial covenants in order to
maintain its good standing under the Credit Facility. Denison is
also subject to a number of restrictive covenants under the APG
Transaction. Denison may from time to time enter into other
arrangements to borrow money in order to fund its operations and
expansion plans, and such arrangements may include covenants that
have similar obligations or that restrict its business in some
way.





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Events may occur
in the future, including events out of Denison's control, which
could cause Denison to fail to satisfy its obligations under the
Credit Facility, APG Transaction or other debt instruments. In such
circumstances, the amounts drawn under Denison's debt agreements
may become due and payable before the agreed maturity date, and
Denison may not have the financial resources to repay such amounts
when due. The Credit Facility and APG Transaction are secured by
DMI's main properties by a pledge of the shares of DMI. If Denison
were to default on its obligations under the Credit Facility, APG
Transaction or other secured debt instruments in the future, the
lender(s) under such debt instruments could enforce their security
and seize significant portions of Denison's assets.





Change of Control Restrictions





The APG
Transaction and certain other of Denison’s agreements contain
provisions that could adversely impact Denison in the case of a
transaction that would result in a change of control of Denison or
certain of its subsidiaries. In the event that consent is required
from our counterparty and our counterparty chooses to withhold its
consent to a merger or acquisition, then such party could seek to
terminate certain agreements with Denison, including certain
agreements forming part of the APG Transaction, or require Denison
to buy the counterparty’s rights back from them, which could
adversely affect Denison’s financial resources and prospects.
If applicable, these restrictive contractual provisions could delay
or discourage a change in control of our company that could
otherwise be beneficial to Denison or its
shareholders.





Capital Intensive Industry and Uncertainty of Funding





The exploration
and development of mineral properties and the ongoing operation of
mines and facilities requires a substantial amount of capital and
may depend on Denison’s ability to obtain financing through
joint ventures, debt financing, equity financing or other means.
General market conditions, volatile uranium markets, a claim
against the Company, a significant disruption to the
Company’s business or operations or other factors may make it
difficult to secure financing necessary to fund additional
exploration of the Company’s projects or to take advantage of
opportunities for acquisitions, or for the substantial capital that
is typically required in order to bring a mineral project, such as
the Wheeler River project, to a production decision or to place a
property, such as the Wheeler River project, into commercial
production. There is no assurance that the Company will be
successful in obtaining required financing as and when needed on
acceptable terms, and failure to obtain such additional financing
could result in the delay or indefinite postponement of the
Company’s exploration, development or other growth
objectives.





Decommissioning and Reclamation





As owner of the
Elliot Lake decommissioned sites and part owner of the McClean Lake
mill, McClean Lake mines, the Midwest uranium project and certain
exploration properties, and for so long as the Company remains an
owner thereof, the Company is obligated to eventually reclaim or
participate in the reclamation of such properties. Most, but not
all, of the Company’s reclamation obligations are secured,
and cash and other assets of the Company have been reserved to
secure this obligation. Although the Company’s financial
statements record a liability for the asset retirement obligation,
and the bonding requirements are generally periodically reviewed by
applicable regulatory authorities, there can be no assurance or
guarantee that the ultimate cost of such reclamation obligations
will not exceed the estimated liability contained on the
Company’s financial statements.





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As
Denison’s properties approach or go into decommissioning,
regulatory review of the Company’s decommissioning plans may
result in additional decommissioning requirements, associated costs
and the requirement to provide additional financial assurances. It
is not possible to predict what level of decommissioning and
reclamation (and financial assurances relating thereto) may be
required from Denison in the future by regulatory
authorities.





Technical Innovation and Obsolescence





Requirements for
Denison’s products and services may be affected by
technological changes in nuclear reactors, enrichment and used
uranium fuel reprocessing. These technological changes could reduce
the demand for uranium or reduce the value of Denison’s
environmental services to potential customers. In addition,
Denison’s competitors may adopt technological advancements
that give them an advantage over Denison.





Mining and Insurance





Denison’s
business is capital intensive and subject to a number of risks and
hazards, including environmental pollution, accidents or spills,
industrial and transportation accidents, labour disputes, changes
in the regulatory environment, natural phenomena (such as inclement
weather conditions, earthquakes, pit wall failures and cave-ins)
and encountering unusual or unexpected geological conditions. Many
of the foregoing risks and hazards could result in damage to, or
destruction of, Denison’s mineral properties or processing
facilities in which it has an interest; personal injury or death;
environmental damage, delays in or interruption of or cessation of
production or processing or in Denison’s exploration or
development activities; or costs, monetary losses and potential
legal liability and adverse governmental action. In addition, due
to the radioactive nature of the materials handled in uranium
exploration, mining and processing, as applicable, additional costs
and risks are incurred by Denison and its joint venture partners on
a regular and ongoing basis.





Although Denison
maintains insurance to cover some of these risks and hazards in
amounts it believes to be reasonable, such insurance may not
provide adequate coverage in the event of certain circumstances. No
assurance can be given that such insurance will continue to be
available, that it will be available at economically feasible
premiums, or that it will provide sufficient coverage for losses
related to these or other risks and hazards.





Denison may be
subject to liability or sustain loss for certain risks and hazards
against which it cannot insure or which it may reasonably elect not
to insure because of the cost. This lack of insurance coverage
could result in material economic harm to Denison.





Dependence on Issuance of Licence Amendments and
Renewals





Orano Canada
maintains the regulatory licences in order to operate the McClean
Lake mill, all of which are subject to renewal from time to time
and are required in order for the mill to operate in compliance
with applicable laws and regulations. In addition, depending on
Orano Canada’s or the Company’s business requirements,
it may be necessary or desirable to seek amendments to one or more
of its licences from time to time. While Orano Canada and the
Company have been successful in renewing its licences on a timely
basis in the past and in obtaining such amendments as have been
necessary or desirable, there can be no assurance that such licence
renewals and amendments will be issued by applicable regulatory
authorities on a timely basis or at all in the future.





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Governmental Regulation and Policy Risks





Uranium mining
and milling operations and exploration activities, as well as the
transportation and handling of the products produced, are subject
to extensive regulation by federal, provincial and state
governments. Such regulations relate to production, development,
exploration, exports, imports, taxes and royalties, labour
standards, occupational health, waste disposal, protection and
remediation of the environment, mine decommissioning and
reclamation, mine safety, toxic substances, transportation safety
and emergency response, and other matters. Compliance with such
laws and regulations is currently, and has historically, increased
the costs of exploring, drilling, developing, constructing,
operating and closing Denison’s mines and processing
facilities. It is possible that, in the future, the costs, delays
and other effects associated with such laws and regulations may
impact Denison’s decision with respect to exploration and
development properties, including whether to proceed with
exploration or development, or that such laws and regulations may
result in Denison incurring significant costs to remediate or
decommission properties that do not comply with applicable
environmental standards at such time. Denison expends significant
financial and managerial resources to comply with such laws and
regulations. Denison anticipates it will have to continue to do so
as the historic trend toward stricter government regulation may
continue. Because legal requirements are frequently changing and
subject to interpretation, Denison is unable to predict the
ultimate cost of compliance with these requirements or their effect
on operations. Furthermore, future changes in governments,
regulations and policies, such as those affecting Denison’s
mining operations and uranium transport could materially and
adversely affect Denison’s results of operations and
financial condition in a particular period or its long-term
business prospects.





Failure to comply
with applicable laws, regulations and permitting requirements may
result in enforcement actions. These actions may result in orders
issued by regulatory or judicial authorities causing operations to
cease or be curtailed, and may include corrective measures
requiring capital expenditures, installation of additional
equipment or remedial actions. Companies engaged in uranium
exploration operations may be required to compensate others who
suffer loss or damage by reason of such activities and may have
civil or criminal fines or penalties imposed for violations of
applicable laws or regulations.





The development
of mines and related facilities is contingent upon governmental
approvals that are complex and time consuming to obtain and which,
depending upon the location of the project, involve multiple
governmental agencies. The duration and success of such approvals
are subject to many variables outside Denison’s control. Any
significant delays in obtaining or renewing such permits or
licences in the future could have a material adverse effect on
Denison.





Global Demand and International Trade Restrictions





The international
uranium industry, including the supply of uranium concentrates, is
relatively small compared to other minerals, competitive and
heavily regulated. Worldwide demand for uranium is directly tied to
the demand for electricity produced by the nuclear power industry,
which is also subject to extensive government regulation and
policies. In addition, the international marketing of uranium is
subject to governmental policies and certain trade restrictions.
The supply and marketing of uranium from Russia and from certain
republics of the former Soviet Union is, to some extent, impeded by
a number of international trade agreements and policies. These
agreements and any similar future agreements, governmental policies
or trade restrictions are beyond the control of Denison and may
affect the supply of uranium available in the United States and
Europe, which are currently the largest markets for uranium in the
world, as well as the future of supply to developing markets, such
as China and India. If substantial changes are made to the
regulations affecting global marketing and supply, the
Company’s business, financial condition and results of
operations may be materially adversely affected.





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Environmental, Health and Safety Risks





Denison has
expended significant financial and managerial resources to comply
with environmental protection laws, regulations and permitting
requirements in each jurisdiction where it operates, and
anticipates that it will be required to continue to do so in the
future as the historical trend toward stricter environmental
regulation may continue. The uranium industry is subject to, not
only the worker health, safety and environmental risks associated
with all mining businesses, including potential liabilities to
third parties for environmental damage, but also to additional
risks uniquely associated with uranium mining and processing. The
possibility of more stringent regulations exists in the areas of
worker health and safety, the disposition of wastes, the
decommissioning and reclamation of mining and processing sites, and
other environmental matters each of which could have a material
adverse effect on the costs or the viability of a particular
project.





Denison’s
facilities operate under various operating and environmental
permits, licences and approvals that contain conditions that must
be met, and Denison’s right to continue operating its
facilities is, in a number of instances, dependent upon compliance
with such conditions. Failure to meet any such condition could have
a material adverse effect on Denison’s financial condition or
results of operations.





Although the
Company believes its operations are in compliance, in all material
respects, with all relevant permits, licences and regulations
involving worker health and safety as well as the environment,
there can be no assurance regarding continued compliance or ability
of the Company to meet stricter environmental regulation, which may
also require the expenditure of significant additional financial
and managerial resources.





Mining companies
are often targets of actions by non-governmental organizations and
environmental groups in the jurisdictions in which they operate.
Such organizations and groups may take actions in the future to
disrupt Denison's operations. They may also apply pressure to
local, regional and national government officials to take actions
which are adverse to Denison's operations. Such actions could have
an adverse effect on Denison's ability to produce and sell its
products, and on its financial position and results.





Aboriginal Title and Consultation Issues





First Nations and
Métistitle claims
as well as related consultation issues may impact Denison’s
ability and that of its joint venture partners to pursue
exploration, development and mining at its Saskatchewan properties.
Pursuant to historical treaties, First Nations bands in northern
Saskatchewan ceded title to most traditional lands but continue to
assert title to the minerals within the lands. Managing relations
with the local native bands is a matter of paramount importance to
Denison. There may be no assurance, however, that title claims as
well as related consultation issues will not arise on or with
respect to the Company’s properties.





Anti-Bribery and Anti-Corruption Laws





The Company is
subject to anti-bribery and anti-corruption laws, including the
Corruption of Foreign Public
Officials Act (Canada). Failure to comply with these laws
could subject the Company to, among other things, reputational
damage, civil or criminal penalties, other remedial measures and
legal expenses which could adversely affect the Company’s
business, results from operations, and financial condition. It may
not be possible for the Company to ensure compliance with
anti-bribery and anti-corruption laws in every jurisdiction in
which its employees, agents, sub-contractors or joint venture
partners are located or may be located in the future.





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Climate Change





Due to changes in
local and global climatic conditions, many analysts and scientists
predict an increase in the frequency of extreme weather events such
as floods, droughts, forest and brush fires and extreme storms.
Such events could materially disrupt the Company’s
operations, particularly if they affect the Company’s sites,
impact local infrastructure or threaten the health and safety of
the Company’s employees and contractors. As a result, any
such event could result in material economic harm to
Denison.





The Company is
focused on operating in a manner designed to minimize the
environmental impacts of its activities; however, environmental
impacts from mineral exploration and mining activities are
inevitable. Increased environmental regulation and/or the use of
fiscal policy by regulators in response to concerns over climate
change and other environmental impacts, such as additional taxes
levied on activities deemed harmful to the environment, could have
a material adverse effect on Denison’s financial condition or
results of operations.





Information Systems and Cyber Security





The Company's
operations depend upon the availability, capacity, reliability and
security of its information technology (IT) infrastructure, and its
ability to expand and update this infrastructure as required, to
conduct daily operations. Denison relies on various IT systems in
all areas of its operations, including financial reporting,
contract management, exploration and development data analysis,
human resource management, regulatory compliance and communications
with employees and third parties.





These IT systems
could be subject to network disruptions caused by a variety of
sources, including computer viruses, security breaches and
cyber-attacks, as well as network and/or hardware disruptions
resulting from incidents such as unexpected interruptions or
failures, natural disasters, fire, power loss, vandalism and theft.
The Company's operations also depend on the timely maintenance,
upgrade and replacement of networks, equipment, IT systems and
software, as well as pre-emptive expenses to mitigate the risks of
failures.





The ability of
the IT function to support the Company’s business in the
event of any such occurrence and the ability to recover key systems
from unexpected interruptions cannot be fully tested. There is a
risk that, if such an event actually occurs, the Company’s
continuity plan may not be adequate to immediately address all
repercussions of the disaster. In the event of a disaster affecting
a data centre or key office location, key systems may be
unavailable for a number of days, leading to inability to perform
some business processes in a timely manner. As a result, the
failure of Denison’s IT systems or a component thereof could,
depending on the nature of any such failure, adversely impact the
Company's reputation and results of operations.





Although to date
the Company has not experienced any material losses relating to
cyber attacks or other information security breaches, there can be
no assurance that the Company will not incur such losses in the
future. Unauthorized access to Denison’s IT systems by
employees or third parties could lead to corruption or exposure of
confidential, fiduciary or proprietary information, interruption to
communications or operations or disruption to the Company’s
business activities or its competitive position. Further,
disruption of critical IT services, or breaches of information
security, could have a negative effect on the Company’s
operational performance and its reputation.





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The Company's
risk and exposure to these matters cannot be fully mitigated
because of, among other things, the evolving nature of these
threats. As a result, cyber security and the continued development
and enhancement of controls, processes and practices designed to
protect systems, computers, software, data and networks from
attack, damage or unauthorized access remain a
priority.





The Company
applies technical and process controls in line with
industry-accepted standards to protect information, assets and
systems; however these controls may not adequately prevent
cyber-security breaches. There is no assurance that the Company
will not suffer losses associated with cyber-security breaches in
the future, and may be required to expend significant additional
resources to investigate, mitigate and remediate any potential
vulnerabilities. As cyber threats continue to evolve, the Company
may be required to expend additional resources to continue to
modify or enhance protective measures or to investigate and
remediate any security vulnerabilities.





Dependence on Key Personnel and Qualified and Experienced
Employees





Denison’s
success depends on the efforts and abilities of certain senior
officers and key employees. Certain of Denison’s employees
have significant experience in the uranium industry, and the number
of individuals with significant experience in this industry is
small. While Denison does not foresee any reason why such officers
and key employees will not remain with Denison, if for any reason
they do not, Denison could be adversely affected. Denison has not
purchased key man life insurance for any of these individuals.
Denison’s success also depends on the availability of
qualified and experienced employees to work in Denison’s
operations and Denison’s ability to attract and retain such
employees.





Conflicts of Interest





Some of the
directors and officers of Denison are also directors of other
companies that are similarly engaged in the business of acquiring,
exploring and developing natural resource properties. Such
associations may give rise to conflicts of interest from time to
time. In particular, one of the consequences would be that
corporate opportunities presented to a director or officer of
Denison may be offered to another company or companies with which
the director or officer is associated, and may not be presented or
made available to Denison. The directors and officers of Denison
are required by law to act honestly and in good faith with a view
to the best interests of Denison, to disclose any interest which
they may have in any project or opportunity of Denison, and, where
applicable for directors, to abstain from voting on such matter.
Conflicts of interest that arise will be subject to and governed by
the procedures prescribed in the Company’s Code of Ethics and
by the OBCA.





Disclosure and Internal Controls





Internal controls
over financial reporting are procedures designed to provide
reasonable assurance that transactions are properly authorized,
assets are safeguarded against unauthorized or improper use, and
transactions are properly recorded and reported. Disclosure
controls and procedures are designed to ensure that information
required to be disclosed by a company in reports filed with
securities regulatory agencies is recorded, processed, summarized
and reported on a timely basis and is accumulated and communicated
to the company’s management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. A control system,
no matter how well designed and operated, can provide only
reasonable, not absolute, assurance with respect to the reliability
of reporting, including financial reporting and financial statement
preparation.





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Potential Influence of KEPCO and KHNP





Effective
December 2016, KEPCO transferred the majority of its interest in
Denison to KEPCO’s subsidiary, KHNP. Denison and KHNP
subsequently entered into the KHNP SRA (on substantially similar
terms as the original strategic relationship agreement between
Denison and KEPCO), pursuant to which KHNP Canada is contractually
entitled to Board representation. Provided KHNP Canada holds over
5% of the Shares, it is entitled to nominate one director for
election to the Board at any shareholder meeting.





KHNP
Canada’s shareholding level gives it a large vote on
decisions to be made by shareholders of Denison, and its right to
nominate a director may give KHNP Canada influence on decisions
made by Denison's Board. Although KHNP Canada’s director
nominee will be subject to duties under the OBCA to act in the best
interests of Denison as a whole, such director nominee is likely to
be an employee of KHNP and he or she may give special attention to
KHNP’s or KEPCO’s interests as indirect Shareholders.
The interests of KHNP and KEPCO, as indirect Shareholders, may not
always be consistent with the interests of other
Shareholders.





The KHNP SRA also
includes provisions granting KHNP Canada a right of first offer for
certain asset sales and the right to be approached to participate
in certain potential acquisitions. The right of first offer and
participation right of KHNP Canada may negatively affect Denison's
ability or willingness to entertain certain business opportunities,
or the attractiveness of Denison as a potential party for certain
business transactions. KEPCO’s large indirect shareholding
block may also make Denison less attractive to third parties
considering an acquisition of Denison if those third parties are
not able to negotiate terms with KEPCO or KHNP Canada to support
such an acquisition.





DENISON’S SECURITIES





The Shares





The Company is
entitled to issue an unlimited number of Shares. As of December 31,
2017, Denison had an aggregate of 559,183,209 Shares issued and
outstanding. As at the date hereof, Denison had an aggregate of
559,183,209 Shares issued and outstanding.





Shareholders are
entitled to receive notice of, and to one vote per share at, every
meeting of Shareholders and to share equally in the assets of
Denison remaining upon the liquidation, dissolution or winding up
of Denison after the creditors of Denison have been
satisfied.





Dividends





Shareholders are
entitled to receive dividends if, as and when declared by the Board
of Directors. The directors have adopted a policy of dedicating
cash flow to reinvestment in the business of the Company.
Accordingly, no dividends have been declared to date. Further, the
Company is restricted from paying dividends under its Credit
Facility.





Fission Replacement Options





In connection
with the acquisition of Fission in 2013, unexercised Fission
options were exchanged for options to acquire Shares of Denison
(the “Fission Replacement
Options”).





During the
financial year ended December 31, 2017, an aggregate of 115,373
Fission Replacement Options were exercised into Shares in
accordance with their terms, and all other outstanding Fission
Replacement Options expired unexercised. As at December 31, 2017,
no Fission Replacement Options remained outstanding.





2017 Annual Information Form   
      95





Price Range and Trading Volume of Shares





The Shares trade
on the TSX under the symbol “DML” and on the NYSE
American under the symbol “DNN”. The following table
sets forth, for the periods indicated, the reported intra-day high
and low sales prices and aggregate volume of trading of the Shares
on the TSX and NYSE American during the year ended December 31,
2017.





Month
High (CAD$)TSX
Low (CAD$)TSX
VolumeTSX
High (US$)NYSE American
Low (US$)NYSE American
VolumeNYSE AmericanJanuary
1.09
0.70
41,518,916
0.84
0.52
31,566,775February
1.10
0.84
26,928,914
0.84
0.64
16,666,002March
0.93
0.78
14,440,812
0.70
0.58
12,001,813April
0.88
0.70
7,771,770
0.66
0.51
8,185,036May
0.72
0.60
10,722,285
0.53
0.45
8,046,470June
0.64
0.54
10,834,608
0.47
0.41
9,026,213July
0.65
0.54
15,228,934
0.53
0.42
10,360,469August
0.65
0.56
8,051,123
0.52
0.44
7,099,542September
0.63
0.56
4,645,754
0.51
0.45
4,069,902October
0.58
0.50
7,248,399
0.47
0.38
5,895,465November
0.75
0.51
30,853,540
0.59
0.40
25,144,680December
0.80
0.62
17,080,901
0.62
0.48
16,630,857





Source:
Bloomberg Finance





Prior Sales





During the year
ended December 31, 2017, the Company issued the following stock
options, each exercisable for a Share at the following exercise
prices:





Date of Issuance
Number of Options Issued
Exercise Prices (CAD)March
10, 2017
6,419,400
$0.85August
4, 2017
40,000
$0.60TOTAL
6,459,400








Escrowed Securities and Securities Subject to Contractual
Restrictions on Transfer





Designation of Class
Number of Securities held in escrow or that are subject to
contractual restriction on transfer
Percentage of Class at December 31, 2017Common
Shares
3,750,000(1)
0.67%





(1)
 The shares are being held in
escrow by Blake, Cassels & Graydon LLP (“Blakes”) pursuant to an escrow
agreement dated November 4, 2016 among the Company, ALX
Uranium Corp. and Blakes in connection with the Hook-Carter
property acquisition. Originally 6,250,000 were held in escrow, and
the shares are released in increments of 1,250,000 shares, twice
per year, beginning on May 4, 2017.








2017
Annual Information
Form         
96





DENISON’S MANAGEMENT





Denison’s Directors





The following
table sets out the names and the provinces and countries of
residence of each of the directors of Denison as of the date
hereof, their respective positions and offices held with Denison
and their principal occupations during the five preceding years.
The following table also identifies the members of each committee
of the Board of Directors.





Name and Province and

Country of Residence
Principal Occupation and Employment for

Past Five Years
Director Since(1)W. Robert Dengler(2,
4, 5)
Ontario,
Canada
Corporate
Director since 2006; prior: Vice-Chairman and Director of Dynatec
Corporation; President and Chief
Executive Officer of Dynatec Corporation.
2006Brian D. Edgar(3,
6, 7)
British Columbia,
Canada
Chairman
of Silver Bull Resources, Inc., a mineral exploration company
listed on both OTCMKTS and the TSX, since 2012, and President and
Chief Executive Officer of Dome Ventures Corporation, a subsidiary
of Silver Bull Resources Inc., since 2005.
2005Ron F.
Hochstein(2)British
Columbia, Canada
Director
of the Company since 2000 and President and Chief Executive Officer
of Lundin Gold Inc. since 2014; prior: President and
Chief Executive Officer of the Company from 2009 to
2015.
2000Kwang Hee Jeong
Gyeongsangbuk,
Korea
General Manager
of the Global Business Planning and Administration Team at KHNP, a
subsidiary of the Korea Electric Power Corporation (KEPCO), since
2016 and has been with KHNP in different positions since
1997.
2017Lukas H. Lundin
Vaud,
Switzerland
Chairman
of the Board of the Company since 1998 (other than Mr. Hochstein's
term as Executive Chairman for a period in 2015); Business/Mining
Executive.
1997William A. Rand(4, 6)
British Columbia,
Canada
President
and director of Rand Investments Ltd., a private investment company
based in British Columbia.
1997Catherine J. G. Stefan(3, 6, 8)
Ontario,
Canada
Lead Director of
the Board of the Company; prior: President, Stefan &
Associates, a consulting firm based in Ontario, from
2009-2016; prior: Managing Partner,
Tivona Capital Corporation, a private investment firm, from
1999-2008.
2006


Notes:


(1)
 The term of office of each of
the directors of Denison will expire at the Annual Meeting of the
Shareholders to be held on May 3, 2018.


(2)
 Member, Environment, Health
and Safety Committee


(3)
 Member, Corporate Governance
and Nominating Committee


(4)
 Member, Compensation
Committee


(5)
 Chair, Compensation Committee
and Environment Health and Safety Committee


(6)
 Member, Audit
Committee


(7)
 Chair, Corporate Governance
and Nominating Committee


(8)
 Chair, Audit
Committee








2017
Annual Information
Form         
97





Denison’s Executive Officers





The following
table sets out the names and the provinces or states and countries
of residence of each of the executive officers of Denison as of the
date hereof, their respective positions and offices held with
Denison and their principal occupations during the five preceding
years.





Name and Province and
Country of Residence
Position with Denison and Employment for Past Five
YearsDavid Cates
Ontario,
Canada
President and
Chief Executive Officer since 2015; Vice President Finance, Tax and
Chief Financial Officer since 2013; prior: Director, Taxation from
2008 to 2012.Peter Longo
Saskatchewan,
Canada
Vice President,
Project Development since 2014; prior: Vice-President, Operations,
Claude Resources Inc., a gold mining company from 2011-2014; prior
Project Manager, AREVA Resources Inc. from 2007-2011.Gabriel McDonald
Ontario,
Canada
Vice President,
Finance and Chief Financial Officer since 2015; prior: Director of
Financial Reporting at IAMGOLD Corporation from 2015, Senior
Manager at PricewaterhouseCoopers LLP from 2008.Michael Schoonderwoerd
Ontario,
Canada
Vice President,
Controller since 2013; prior, Corporate Controller, 2004 to
2012.Dale Verran
Saskatchewan,
Canada
Vice President,
Exploration since January 2016; Technical Director, Exploration
since 2013; prior: Technical Director, Remote Exploration Services
from 2005 to 2013, and Exploration Manager, Manica Minerals Limited
from 2010 to 2013.Amanda Willett
British Columbia,
Canada
Corporate Counsel
and Corporate Secretary since June 2016; prior: Senior Associate at
Blake, Cassels & Graydon LLP in Vancouver since 2011, Associate
at Stikeman Elliott LLP in Toronto since 2008.





The directors and
executive officers of Denison, as a group, beneficially own, or
control or direct, directly or indirectly, 3,153,298 Shares, or
less than one percent of the Shares as of the date of this AIF. No
single director or officer beneficially owns or controls or
directs, directly or indirectly, one percent or more of the Shares
as of the date of this AIF. The information as to Shares
beneficially owned or directed by the directors and officers, not
being within the knowledge of the Company, has been furnished by
each such individual.





Cease Trade Orders, Bankruptcies, Penalties or
Sanctions





Other than as
referred to below, no director or officer of the
Company:





(a) is, as
at the date of this AIF, or has, within the previous ten year
period, been a director or executive officer of a company
(including Denison) that:





(i) was
subject to a cease trade or similar order or an order that denied
the relevant company access to any exemption under securities
legislation that was in effect for a period of more than 30
consecutive days that was issued (A) while that person was acting
in such capacity or (B) after that person ceased to act in such
capacity but which resulted from an event that accrued while that
person was acting in that capacity; or





2017
Annual Information
Form         
98





(ii) became
bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its assets
(A) while that person was acting in such capacity or (B) within a
year of that person ceasing to act in such capacity,
or





(b) has,
within the previous ten year period, become bankrupt, made a
proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings,
arrangement or compromise with creditors, or had a receiver,
receiver manager or trustee appointed to hold such person’s
assets; or





(c) is, or
has been, subject to any penalties or sanctions (i) imposed by a
court relating to securities legislation or by a securities
regulatory authority or has entered into a settlement agreement
with a securities regulatory authority, or (ii) imposed by a court
or regulatory body that would likely be considered important to a
reasonable security holder in making an investment
decision.





Ron Hochstein and
Lukas Lundin were directors of Sirocco Mining Inc.
(“Sirocco”).
Pursuant to a plan of arrangement completed on January 31, 2014,
Canadian Lithium Corp. amalgamated with Sirocco to form RB Energy
Inc. (“RBI”). In
October 2014, RBI commenced proceedings under the Companies'
Creditors Arrangement Act (the “CCAA”). CCAA proceedings continued
in 2015 and a receiver was appointed in May 2015. The TSX de-listed
RBI’s common shares in November 24, 2014 for failure to meet
the continued listing requirements of the TSX. Although Lukas
Lundin was never a director, officer or insider of RBI, he was a
director of Sirocco within the 12-month period prior to RBI filing
under the CCAA. Ron Hochstein was a director of RBI from the time
of the plan of arrangement with Canadian Lithium Corp. to October
3, 2014.





Conflicts of Interest





Some of
Denison’s directors and officers are also directors and/or
officers of other natural resource companies and, consequently,
there exists the possibility for such directors and officers to be
in a position of conflict relating to any future transactions or
relationships between the Company or common third parties. However,
the Company is unaware of any such pending or existing conflicts
between these parties. Any decision made by any of such directors
and officers involving the Company are made in accordance with
their duties and obligations to deal fairly and in good faith with
the Company and such other companies and their obligations to act
in the best interests of Denison’s shareholders. In addition,
each of the directors of the Company discloses and refrains from
voting on any matter in which such director may have a conflict of
interest.





None of the
present directors or senior officers of the Company, and no
associate or affiliate of any of them, has any material interest in
any transaction of the Company or in any proposed transaction which
has materially affected or will materially affect the Company
except as described herein.





●
 Investor relations,
administrative service fees and other expenses of
USD$147,000were
incurred during the financial year ended December 31, 2017 with
Namdo Management Services Ltd, a company which shares a common
director with Denison. These services were incurred in the normal
course of operating a public company.


●
 Office and administrative
service fees of USD$46,000 were incurred during the financial year
ended December 31, 2017 with Lundin S.A., a company with which a
director of Denison is affiliated.





2017
Annual Information
Form         
99





●
 One of Denison’s
directors, Mr. Jeong, is employed by KHNP, a subsidiary of KEPCO
and the parent corporation of KHNP Canada. Through its corporate
holdings, KEPCO is a significant shareholder of the Company, with
approximately 10.42% of the outstanding Shares as of the date
hereof (the majority of which are held directly by KHNP Canada).
The Company and KHNP Canada are parties to the KHNP SRA, which may
present a conflict of interest for Mr. Jeong. The KHNP SRA provides
KHNP Canada with a right of first offer for certain asset sales and
the right to be approached to participate in certain potential
acquisitions being considered by Denison. While the Company is not
aware of a pending or existing conflict of interest with Mr. Jeong
as of the date hereof, the interests of KEPCO, KHNP and KHNP Canada
as shareholders of Denison and their business relationships with
Denison may place Mr. Jeong in a position of conflict as a director
of the Company in the future.





Interest of Management and Others in Material
Transactions





Other than as
disclosed in this AIF, no director or executive officer of Denison,
no person or company that beneficially owns, controls or directs,
indirectly or directly, more than 10% of the Shares, and no
associate or affiliate of any of them, has or has had, within the
three most recently completed financial years or during the current
financial year, any material interest, direct or indirect, in any
transaction which materially affects or is reasonably expected to
materially affect Denison.





Standing Committees of the Board





The Audit Committee





The audit
committee of the Company’s Board of Directors is principally
responsible for:





● recommending to
the Company’s Board of Directors the external auditor to be
nominated for election by the Company’s shareholders at each
annual general meeting and negotiating the compensation of such
external auditor;





● overseeing the
work of the external auditor;





● reviewing the
Company’s annual and interim financial statements, its
MD&A in respect thereof and press releases regarding earnings
before they are reviewed and approved by the Board of Directors and
publicly disseminated by the Company; and





● reviewing the
Company’s financial reporting procedures for the
Company’s public disclosure of financial information
extracted or derived from its financial statements.





The
Company’s Board of Directors has adopted an audit committee
mandate/terms of reference (the “Mandate”) which sets out the Audit
Committee’s mandate, organization, powers and
responsibilities. The complete Mandate is attached as Schedule A to
this AIF.





Below are the
details of each Audit Committee member, including his or her name,
whether she or he is independent and financially literate as such
terms are defined under National Instrument 52-110 - Audit Committees of the Canadian
Securities Administrators(“NI 52-110”) and his or her
education and experience as it relates to the performance of his or
her duties as an Audit Committee member. All three audit committee
members have “financial expertise” within the meaning
of the U.S. Sarbanes-Oxley
Act of 2002, as amended, and are financially literate under
NI 52-110. The qualifications and independence of each member is
discussed.








2017
Annual Information
Form         
100





Director
Independent(1)
Financially Literate(2)
Education & Experience Relevant to Performance of Audit
Committee DutiesCatherine J.G.
Stefan
Chair of the
Audit Committee
Yes
Yes
●Chartered Professional
Accountant, Chartered Accountant
●B.Comm
●Held position of Chief
Operating Officer, O&Y Properties Inc., President of Stefan
& Associates and Executive Vice-President of Bramalea Group,
Chair, Tax Committee of the Canadian Institute of Public Real
Estate Companies (CIPREC).Brian D.
Edgar
Yes
Yes
●Law degree, with extensive
corporate finance experience
●Held positions of Chairman
(since 2011) and President and Chief Executive Officer (2005 to
2011) of a public company.
●Has served on audit
committees of a number of public companiesWilliam A.
Rand
Yes
Yes
●B.Comm
(Accounting)
●Two law degrees, with
extensive corporate finance experience
●Has served on audit
committees of a number of public companies


Notes:


(1)
 Independent within the
meaning of NI 52-110.


(2)
 To be considered financially
literate, a member of the Committee must have the ability to read
and understand a set of financial statements that present a breadth
and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of the issues that can
reasonably be expected to be raised by the Company’s
financial statements.





Since the
commencement of the Company’s most recently completed
financial year, there has not been a recommendation of the Audit
Committee to nominate or compensate an internal auditor which was
not adopted by the Company’s Board of Directors.





The Audit
Committee has adopted specific policies and procedures for the
engagement of non-audit services as described in Section D of the
Mandate.





The following
table discloses the fees billed to the Company by its external
auditor, PricewaterhouseCoopers LLP (“PwC”), during the last two fiscal
years.





Financial Year
Ending
Audit Fees(1)
Audit-Related
Fees(2)
Tax Fees(3)
All Other Fees(4)December 31,
2017
$173,526
$115,212
Nil
NilDecember 31,
2016
$175,988
$128,978
Nil
Nil





Notes:


(1)
 The aggregate fees billed for
audit services of the Company’s consolidated financial
statements.


(2)
 The aggregate fees billed for
assurance and related services that are reasonably related to the
performance of the audit or review of the Company’s financial
statements and are not disclosed in the Audit Fees column. Fees
relate to reviews of interim consolidated financial statements and
specified audit procedures not included as part of the audit of the
consolidated financial statements.


(3)
 The aggregate fees billed for
tax compliance, tax advice, and tax planning services, such as
transfer pricing and tax return preparation.


(4)
 The aggregate fees billed for
professional services other than those listed in the other
columns.





2017 Annual Information Form   
      101





Other Board Committees





The Board currently has three other standing
committees in addition to the Audit Committee, namely the Corporate
Governance and Nominating Committee, the Compensation Committee and
the Environment, Health and Safety Committee. Each standing committee of the Board operates
according to its mandate, which is approved by the Board and sets
out the committee’s duties and responsibilities. A discussion
of each committee and its composition can be found in the most
recent management information circular prepared in connection with
the Company’s Shareholder meeting, and copies of the standing
committee mandates are available on the Company’s website
at www.denisonmines.com.





Corporate
Governance





As a Canadian reporting issuer with its Shares
listed on the TSX, Denison has in place a system of corporate
governance practices which is responsive to applicable Canadian
requirements, including National Policy 58-201 -
Corporate
Governance Guidelines of the
Canadian Securities Administrators (the “Guidelines”). Denison's corporate governance practices
meet or exceed the Guidelines and all other applicable Canadian
requirements. Reference is made to the Corporate Governance
Practices section of the Circular, which contains a description of
the Company’s system of corporate governance practices with
reference to the Guidelines.





Denison
is classified as a foreign private issuer under U.S. securities law
and its Shares are listed on NYSE American. Pursuant to the rules
of the NYSE American, a foreign private issuer is permitted to
follow home country practice except with respect to certain rules,
with which Denison complies.





LEGAL AND REGULATORY PROCEEDINGS





Except as
described below, the Company is not currently a party to, nor was
it a party to during the last financial year, and none of the
Company’s property is or was the subject of, any material
legal proceedings, and the Company knows of no such material legal
proceedings that are contemplated. However, from time to time, the
Company may become party to routine litigation incidental to its
business or other litigation matters deemed non-material by the
Company.





Uranium
Industry a.s. Arbitration





Under the terms
of the GSJV Purchase Agreement with respect to the Mongolia
Transaction, the issuance by the Mongolian government of mining
licence certificates for the Hairhan, Haraat, Gurvan Saihan and
Ulzit projects in 2016 triggered an obligation for UI to make an
aggregate of USD$10,000,000 of contingent payments to Denison by
November 16, 2016.





Pursuant to the
Extension Agreement subsequently entered into between UI and the
Company, the payment due date for the contingent payments was
extended from November 16, 2016 to July 16, 2017. As consideration
for the extension, UI agreed to pay interest on the contingent
payments at a rate of 5% per year, payable monthly up to July 16,
2017 and agreed to pay a USD$100,000 instalment amount towards the
balance of contingent payments. The first payment under the
Extension Agreement was due on or before January 31, 2017. The
required payments were not made and UI is in breach of the GSJV
Purchase Agreement and the Extension Agreement.








2017 Annual Information Form   
      102





On February 24,
2017, the Company served notice to UI that UI was in default of its
obligations under the GSJV Agreement and the Extension Agreement
and that the contingent payments and all interest payable thereon
are immediately due and payable. On December 12, 2017, the Company
filed a Request for Arbitration under the Arbitration Rules of the
London Court of International Arbitration in conjunction with the
default of UI’s obligations under the GSJV and Extension
agreements, to which Uranium Industry submitted its response and
counterclaim on February 14, 2018. The parties have appointed a
chair for the three member arbitration panel, and are considering
initial procedural matters.





MATERIAL CONTRACTS





Reference is made
to the material contracts which have been filed by Denison with the
Canadian securities regulatory authorities on the SEDAR website at
www.sedar.com.





Below are the
particulars of each contract, other than those entered into in the
ordinary course of business, that is material to Denison and that
was entered into between January 1, 2016 and the date hereof or was
entered into before those dates but is still in
effect:





1.
 The following agreements
executed in connection with the APG Transaction:





a.
 The loan agreement between
DMI and SPV dated January 31, 2017 with respect to the DMI
Loan;





b.
 The loan agreement between
SPV and APG dated January 31, 2017 with respect to the SPV
Loan;





c.
 The performance guarantee by
Denison as guarantor in favour of the SPV as beneficiary and APG as
permitted assignee, pursuant to which Denison has agreed to
guarantee the performance of DMI’s obligations to SPV under
the SPV Loan, which guarantee has been assigned by SPV in favour of
APG;





d.
 The streaming agreement
between the DMI and Centaurus dated January 31, 2017 with respect
to the Stream Arrangement; and





e.
 The performance guarantee by
Denison as guarantor in favour of Centaurus as beneficiary,
pursuant to which Denison has agreed to guarantee the performance
of DMI’s obligations to Centaurus under the Stream
Arrangement.





2.
 The Reclamation Funding
Agreement made as of the 21st day of December
1995 among Denison Mines Limited (“DML”), Her Majesty the Queen in
Right of Canada (the “Government of Canada”) and Her
Majesty the Queen in Right of the Province of Ontario (the
“Government of
Ontario”) as amended by the Amending Agreement made as
of the 11th day of April 1997
among DML (now DMI), the Government of Canada and the Government of
Ontario and as further amended by the Amending Agreement made as of
the 25th
day of February 1999 among DML, the Government of Canada and the
Government of Ontario and further amended by an Assignment and
Novation Agreement made as of the 29th day of December,
2003 among Denison Energy, DMI, the Government of Canada and the
Government of Ontario.





According to the
Reclamation Funding Agreement, the Company is required to maintain
funds in an Environmental Trust sufficient for the succeeding six
years of the estimated reclamation and on-going care and monitoring
expenditures for the Company’s closed Elliot Lake mining
facility.








2017 Annual Information Form   
      103





3.
 The KHNP SRA dated September
19, 2017 between the Company and KHNP Canada.





The KHNP SRA
provides for a long-term collaborative business relationship
between the parties, replacing the strategic relationship agreement
made as of June 15, 2009 among the Company, KEPCO and KEPCO Canada
Uranium Investment Limited Partnership. Under the KHNP SRA, KHNP
Canada is entitled to the nomination of one Board representative,
provided that KHNP Canada’s shareholding percentage stays
above 5%.





The KHNP SRA also
provides that if Denison intends to sell an interest in certain of
its substantial assets, it will first notify KHNP Canada of each
such proposed sale and provide KHNP Canada with a 30-day right of
first offer to allow KHNP Canada to purchase the interest in the
asset that Denison proposes to sell. The KHNP SRA provides that
Denison will allow KHNP Canada to participate in potential
purchases of certain assets, including a mill facility, a producing
mine or a mineral resource for which a production feasibility study
has been completed, which Denison plans to pursue with a
co-investor. KHNP Canada’s ability to purchase will not be
available where Denison and KHNP Canada cannot agree on terms
within a reasonable time or where their involvement would adversely
affect Denison's ability to pursue an investment opportunity. The
right of first offer and co-investment rights are subject to
pre-existing contractual commitments and do not apply to certain
pre-existing transactions. KHNP Canada is also entitled to
subscribe for additional Shares in order to maintain or increase
its shareholding percentage in Denison to thresholds which are
relevant to its rights under the KHNP SRA, in circumstances where
Denison completes a public offering or broadly distributed private
placement to raise proceeds of greater than $10
million.





Denison is
entitled to terminate the KHNP SRA if KHNP Canada’s
shareholding percentage in Denison drops below 5% and stays below
5% for 60 days following delivery of a notice to that effect by
Denison to KHNP Canada or if Denison completes an Extraordinary
Transaction, as defined in the KHNP SRA.





NAMES AND INTERESTS OF EXPERTS





The
Company’s Independent Registered Public Accounting Firm is
PricewaterhouseCoopers LLP, Chartered Professional Accountants,
Licensed Public Accountants, who have issued an independent
auditor’s report dated March 8, 2018 in respect of
Denison’s consolidated financial statements as at
December 31, 2017 and 2016 for the years ended 2017 and 2016
and the effectiveness of the Company’s internal control over
financial reporting as at December 31, 2017. PwC has advised that
it is independent with respect to the Company within the meaning of
the Rules of Professional Conduct of the Chartered Professional Accountants of
Ontario and Public Company Accounting Oversight Board Rule
3520 Auditor Independence.





Dale Verran, MSc,
Pr.Sci.Nat., Denison’s Vice President, Exploration, who is a
"Qualified Person" within the meaning of this term in NI 43-101,
has prepared sections of this AIF that are of a scientific or
technical nature pertaining to the Company’s mineral projects
and has verified the data disclosed therein. To the knowledge of
Denison, Dale Verran is the registered or beneficial owner,
directly or indirectly, of less than one percent of the outstanding
Shares.








2017
Annual Information
Form         
104


Peter Longo,
P.Eng, MBA, PMP, Denison’s Vice President Project
Development, who is a "Qualified Person" within the meaning of this
term in NI 43-101, has prepared sections of this AIF that are of a
scientific or technical nature pertaining to the Company’s
mineral projects and has verified the data disclosed therein. To
the knowledge of Denison, Peter Longo is the registered or
beneficial owner, directly or indirectly, of less than one percent
of the outstanding Shares.


The Wheeler
Technical Report dated March 15, 2018 was authored by Mark
Mathisen, C.P.G., of RPA and Ken Reipas, P.Eng, of SRK Consulting,
who are independent in accordance with the requirements of NI
43-101.





The J Zone
Technical Report dated September 6, 2013 was authored by
Allan Armitage, Ph.D., P.Geo.,
and Alan Sexton, M.Sc., P.Geo. of GeoVector, which was
retained to independently review and audit mineral resource
estimates in accordance with the requirements of NI
43-101.





RPA, which was
retained to independently review and audit the mineral reserves and
mineral resources in accordance with the requirements of NI 43-101,
prepared the following technical reports:





●
 McClean Technical Report
dated November 21, 2005 as amended on February 16, 2006 by Richard
E. Routledge, M.Sc., P.Geo. and James W. Hendry,
P.Eng.


●
 McClean North Technical
Report dated January 31, 2007 by Richard E. Routledge, M.Sc.,
P.Geo.


●
 Sue D Report dated March 31,
2006 by Richard E Routledge, M.Sc., P.Geo. and James W. Hendry,
P.Eng.





The Midwest
Technical Report dated March 26, 2018 was authored by Dale Verran,
MSc, Pr.Sci.Nat. and Chad Sorba, P.Geo, of the Company and G. David
Keller, PGeo, and Oy Leuangthong, PEng, of SRK Consulting, who were
retained to independently review and audit the mineral reserves in
accordance with the requirements of NI 43-101.





To the knowledge
of Denison as of the date hereof, each of RPA Inc., GeoVector and
SRK Consulting and each of their respective partners, employees and
consultants who participated in the preparation of the
aforementioned reports, or who were in a position to influence the
outcome of such reports, are the registered or beneficial owner,
directly or indirectly, of less than one percent of the outstanding
Shares.








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ADDITIONAL INFORMATION





Additional
information regarding the Company is available on the SEDAR website
at www.sedar.com.
Further information concerning the Company, including directors'
and officers' remuneration and indebtedness, principal holders of
the Company's securities, options to purchase securities and
interests of insiders in material transactions, where applicable,
is contained in the Circular for the Annual General and Special
Meeting of Shareholders to be held on May 3, 2018. Additional
financial information is provided in the Company's audited
consolidated financial statements and MD&A for the financial
year ended December 31, 2017.





A copy of this
AIF, as well as the Circular and such other information and
documentation that the Company makes available via SEDAR, can be
found at www.sedar.com. In addition,
certain of this information is distributed to shareholders in
connection with Denison’s Annual General Meeting of
Shareholders. The Company will provide any of the foregoing
documents subject to its rights to require people who are not
security holders of the Company to pay a reasonable charge. Copies
of these documents may be obtained by writing to:





Denison Mines
Corp.


1100 – 40
University Avenue


Toronto, Ontario, M5J
1T1





Telephone: (416)
979-1991


Facsimile: (416)
979-5893


Email:
info@denisonmines.com









































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Schedule A











Audit Committee Mandate and Charter





A.
 Composition
of the Committee





(1)    
The Board shall appoint annually from among its members at the
first meeting of the Board following the annual meeting of the
shareholders a committee to be known as the Audit Committee (the
“Committee”) to be composed of three (3) directors or
such other number not less than three (3) as the Board may from
time to time determine.





(2)    
Any member of the Committee may be removed or replaced at any time
by the Board. Any member of the Committee ceasing to be a director
or ceasing to qualify under A(3) below shall cease to be a member
of the Committee. Subject to the foregoing, each member of the
Committee shall hold office as such until the next annual
appointment of members to the Committee after his or her election.
Any vacancy occurring in the Committee shall be filled at the next
meeting of the Board.





(3)    
Each member of the Committee shall:





(a) be a
member of the Board;





(b) not be
an officer or employee of the Company or any of its
affiliates;





(c) be an
unrelated director as defined in the Toronto Stock Exchange (the
“TSX”) Corporate Governance Guidelines (“TSX
Guidelines”) as the same may be amended from time to
time;





(d) satisfy
the independence requirements applicable to members of audit
committees under each of Multilateral Instrument 52-110 –
Audit Committees of the Canadian Securities Administrators
(“M1 52-110”), Rule 10A-3(b)(1)(ii) of the United
States Securities and Exchange Commission, and any other applicable
laws and regulations, as the same may be amended from time to time
(with the TSX Guidelines, “Applicable Laws”);
and





(e) satisfy
the financial literacy requirements prescribed by Applicable
Laws.





(4)    
A majority of the Committee shall constitute a quorum.





(5)    
The Committee shall elect annually a chairperson from among its
members.








B.
 Purpose
 
 (1)    
The Committee’s purpose is to assist the Board in its
supervision of the management of the business and affairs of the
Company through oversight of:





(a) the
integrity of the Company’s financial statements,
Management’s Discussion and Analysis (“MD&A”)
and other financial reporting;





(b) the
integrity of the Company’s internal control and management
information systems;





(c) the
Company’s compliance with all applicable laws, rules,
regulations, policies and other requirements of governments,
regulatory agencies and stock exchanges relating to accounting
matters and financial disclosure;





(d) the
auditor’s qualifications and activities;





(e) communication among
the auditor, management and the Board; and





(f) such
other matters as are determined by the Board from time to
time.





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C.     Committee Resources





(1)    
The Committee shall have direct channels of communication with the
Company’s auditor to discuss and review specific issues as
appropriate.





(2)    
The Committee, or any member of the Committee with the approval of
the Committee, may retain at the expense of the Company such
independent legal, accounting (other than the auditor) or other
advisors on such terms as the Committee may consider appropriate
and shall not be required to obtain the approval of the Board in
order to retain or compensate any such advisors.





(3)    
The Committee shall have unrestricted access to Company personnel
and documents and shall be provided with all necessary funding and
other resources to carry out its responsibilities.





D.     Committee Responsibilities





(1)    
The responsibilities of the Committee shall be to:





(a) with
respect to financial accounting matters:





(i)
 review with management and
the external auditors the annual consolidated financial statements,
MD&A and press release announcing annual financial results of
operations before making recommendations to the Board relating to
approval of such documents;





(ii)
 review with management and
the external auditors interim financial statements, MD&A and
press release announcing interim financial results of operations
before making recommendations to the Board relating to approval of
such documents;





(iii)
 review and discuss with
management and the external auditors all public disclosure
documents containing audited or unaudited financial information
including: any Prospectus; the Annual Report; interim unaudited
reports; and any material change report pertaining to the
Company’s financial matters. The Committee will review the
consistency of the foregoing documents with facts, estimates or
judgments contained in the audited or unaudited financial
statements;





(iv)
 satisfy itself that adequate
procedures are in place for the review of the Company’s
disclosure of financial information extracted or derived from the
Company’s financial statements, other than the
Company’s financial statements, MD&A and earnings press
releases, and shall periodically assess the adequacy of those
procedures;





(v)
 prior to the completion of
the annual audit, and at any other time deemed advisable by the
Committee, review and discuss with management and the auditor the
quality of the Company’s accounting policies and financial
statement presentation, including, without limitation, the
following:





1. all
critical accounting policies and practices to be used, including,
without limitation, the reasons why certain estimates or policies
are or are not considered critical and how current and anticipated
future events may impact those determinations as well as an
assessment of any proposed modifications by the auditors that were
not made;





2. all
alternative accounting treatments for policies and practices that
have been discussed by management and the auditors;
and





3. other
material written communications between the auditor and management,
including, without limitation, any management letter, schedule of
unadjusted differences, the management representation letter,
report on internal controls, as well as the engagement letter and
the independence letter;





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(vi) review
annually the accounting principles and practices followed by the
Company and any changes in the same as they occur;





(vii) review
new accounting principles of the Chartered Professional Accountants
of Canada and the International Accounting Standards Board which
would have a significant impact on the Company’s financial
reporting as reported to the Committee by management;





(viii) review the
status of material contingent liabilities as reported to the
Committee by management;





(ix) review
potentially significant tax problems as reported to the Committee
by management; and





(x) review
any errors or omissions in the current or prior year’s
financial statements which appear material as reported to the
Committee by management;





(b) with
respect to the external auditors:





(i) be
directly responsible for recommending the appointment of the
auditor, the auditor’s compensation, retention and
termination and for oversight of the work of the auditor
(including, without limitation, resolution of disagreements between
management and the auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing other
audit, review or services for the Company;





(ii) approve, prior to
the auditor’s audit, the auditor’s audit plan
(including, without limitation, staffing), the scope of the
auditor’s review and all related fees;





(iii) satisfy itself as
to the independence of the auditor. The Committee shall pre-approve
any non-audit services (including, without limitation, fees
therefor) provided to the Company or its subsidiaries by the
auditor or any auditor of any such subsidiary and shall consider
whether these services are compatible with the auditor’s
independence, including, without limitation, the nature and scope
of the specific non-audit services to be performed and whether the
audit process would require the auditor to review any advice
rendered by the auditor in connection with the provision of
non-audit services. The Committee shall not allow the auditor to
render any non-audit services to the Company or its subsidiaries
that are prohibited by Applicable Law;





(iv) review
and approve the Company’s policies concerning the hiring of
employees and former employees of the Company’s auditor or
former auditor.





(c) with
respect to internal controls:





(i) oversee
management’s design, testing and implementation of the
Company’s internal controls and management information
systems and review the adequacy and effectiveness
thereof.





(d) with
respect to concerns and complaints:





(i) establish procedures
for:





1. the
receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls or
auditing matters; and





2. the
confidential, anonymous submission by employees of the Company of
concern regarding questionable accounting or auditing
matters.





(e) with
respect to ethics:





(i) The
Committee shall be responsible for oversight and enforcement of the
Code of Ethics for the Chief Executive Officer, Senior Financial
Officers and Other Officers of the Company, subject to the
supervision of the Board.





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(f) with
respect to general audit matters:





(i) inquire
of management and the external auditors as to any activities that
may or may not appear to be illegal or unethical;





(ii) review
with management, the operations analyst and the external auditors
any frauds reported to the Audit Committee;





(iii) review
with the external auditors the adequacy of staffing for accounting
and financial responsibilities; and





(iv) report
and make recommendations to the Board as the Committee considers
appropriate.





(2) In
addition, the Board may refer to the Committee such matters and
questions relating to the Company as the Board may from time to
time see fit;





(3) Any
member of the Committee may require the auditors to attend any or
every meeting of the Committee.





E. Meetings





(1) The
times of and the places where meetings of the Audit Committee shall
be held and the calling of and procedure at such meetings shall be
determined from time to time by the Committee, provided however
that the Committee shall meet at least quarterly, and the Committee
shall maintain minutes or other records of its meetings and
activities. Notice of every such meeting to be given in writing not
less than five (5) days prior to the date fixed for the meeting,
and shall be given to the auditors of the Company, that the
auditors shall be entitled to attend and be heard thereat. Meetings
shall be convened whenever requested by the auditors, the
operations analyst or any member of the Audit Committee in
accordance with the Ontario Business Corporations Act.





(2) As part
of each meeting of the Committee at which it recommends that the
Board approve the financial statements of the Company, and at such
other times as the Committee deems appropriate, the Committee shall
meet separately with the auditor to discuss and review specific
issues as appropriate.





F. Evaluation of Charter and Mandate





(1) On at
least an annual basis, the Committee shall review and assess the
adequacy of this Charter and Mandate and recommend any proposed
changes to the Board of Directors.





(2) All
prior resolutions of the Board relating to the constitution and
responsibilities of the Audit Committee are hereby
repealed.





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Schedule B





Glossary of Technical Terms





Note: The terms
related to Mineral resources and mineral reserves presented herein
are as defined in “CIM DEFINITION STANDARDS on Mineral
Resources and Mineral Reserves” prepared by the CIM Standing
Committee on Reserve Definitions, adapted by CIM Council, May 10,
2014.





eU3O8


This term refers to equivalent
U3O8
grade derived from the downhole
logging of drill holes using a calibrated total gamma
probe.





Feasibility Study


A Feasibility
Study is a comprehensive technical and economic study of the
selected development option for a mineral project that includes
appropriately detailed assessments of applicable Modifying Factors
together with any other relevant operational factors and detailed
financial analysis that are necessary to demonstrate, at the time
of reporting, that extraction is reasonably justified (economically
mineable). The results of the study may reasonably serve as the
basis for a final decision by a proponent or financial institution
to proceed with, or finance, the development of the project. The
confidence level of the study will be higher than that of a
Pre-Feasibility Study.





Historical Estimate


A historical
estimate means an estimate of the quantity, grade or metal or
mineral content of a deposit that an issuer has not verified as a
current mineral resource or mineral reserve, and which was prepared
before the issuer acquiring, or entering into an agreement to
acquire, an interest in the property that contains the
deposit.





Indicated Mineral Resource


An indicated
mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape and physical
characteristics, can be estimated with a level of confidence
sufficient to allow the appropriate application of technical and
economic parameters, to support mine planning and evaluation of the
economic viability of the deposit. The estimate is based on
detailed and reliable exploration and testing information gathered
through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that are spaced closely
enough for geological and grade continuity to be reasonably
assumed.





Inferred Mineral Resource


An inferred
mineral resource is that part of a mineral resource for which
quantity and grade or quality can be estimated on the basis of
geological evidence and limited sampling and reasonably assumed,
but not verified, geological and grade continuity. The estimate is
based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches,
pits, workings and drill holes





Measured Mineral Resource


A measured
mineral resource is that part of a mineral resource for which
quantity, grade or quality, densities, shape, and physical
characteristics are so well established that they can be estimated
with confidence sufficient to allow the appropriate application of
technical and economic parameters, to support production planning
and evaluation of the economic viability of the deposit. The
estimate is based on detailed and reliable exploration, sampling
and testing information gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill
holes that are spaced closely enough to confirm both geological and
grade continuity.





Mineral Reserve


A mineral reserve
is the economically mineable part of a measured or indicated
mineral resource demonstrated by at least a Preliminary Feasibility
Study. This Study must include adequate information on mining,
processing, metallurgical, economic and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can
be justified. A mineral reserve includes diluting materials and
allowances for losses that may occur when the material is
mined.





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Mineral Resource


A mineral
resource is a concentration or occurrence of diamonds, natural
solid inorganic material, or natural solid fossilized organic
material including base and precious metals, coal, and industrial
materials in or on the Earth’s crust in such form and
quantity and of such a grade or quality that it has reasonable
prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a mineral resource are
known, estimated or interpreted from specific geological evidence
and knowledge.





Modifying Factors


Modifying Factors
are considerations used to convert Mineral Resources to Mineral
Reserves. These include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing,
legal, environmental, social and governmental factors.





Preliminary Feasibility Study or Pre-Feasibility Study


A Pre-Feasibility
Study is a comprehensive study of a range of options for the
technical and economic viability of a mineral project that has
advanced to a stage where a preferred mining method, in the case of
underground mining, or the pit configuration, in the case of an
open pit, is established and an effective method of mineral
processing is determined. It includes a financial analysis based on
reasonable assumptions on the Modifying Factors and the evaluation
of any other relevant factors which are sufficient for a Qualified
Person, acting reasonably, to determine if all or part of the
Mineral Resource may be converted to a Mineral Reserve at the time
of reporting. A Pre-Feasibility Study is at a lower confidence
level than a Feasibility Study.





Probable Mineral Reserve


A ‘probable
mineral reserve’ is the economically mineable part of an
indicated, and in some circumstances, a measured mineral resource
demonstrated by at least a Preliminary Feasibility Study. This
Study must include adequate information on mining, processing,
metallurgical, economic, and other relevant factors that
demonstrate, at the time of reporting, that economic extraction can
be justified.





Proven Mineral Reserve


A ‘proven
mineral reserve’ is the economically mineable part of a
measured mineral resource demonstrated by at least a Preliminary
Feasibility Study. This Study must include adequate information on
mining, processing, metallurgical, economic, and other relevant
factors that demonstrate, at the time of reporting, that economic
extraction is justified.





Qualified Person


A
‘Qualified Person’ means an individual who is an
engineer or geoscientist with at least five years of experience in
mineral exploration, mine development or operation or mineral
project assessment, or any combination of these; has experience
relevant to the subject matter of the mineral project and the
technical report and is a member or licensee in good standing of a
professional association of geoscientists and/or engineers meeting
the criteria set out in NI 43-101.














_____________________________________________________________________________________________
 2017
Annual
Information Form B-2