Clock - Uranium Supply Crunch and Critical ... - Andrew Johns

Uranium Canada Research | Page 37 of 87Exhibit 52: Plan Map of Wheeler River Phoenix Zone AZone DZone A ExtensionZone A Stepout(WR438 area)Zones B and CSource: Raymond James Ltd., Denison Mines Corp.JEB Mill, a Strategic Asset. Denison owns a 22.5% share of the McClean Lake JV,including the JEB mill, which was put on care and maintenance in mid-2010. JEB is oneof only four active conventional uranium mills in North America and is unique in that itcan process high-grade ores without down-blending – a strong competitive advantage.Current constructed capacity is 12 Mlbs/year (JV is awaiting permits for this rate;current licensed capacity is 8 Mlbs/year), with expansion work on-going for 22Mlbs/year to accommodate ore from Cigar Lake starting late-2013E. This upgrade is tobe funded by the Cigar Lake JV (50% Cameco, 37% Areva, and 13% Japanese utilities)and environmental approvals are already in place for this capacity. JEB couldtheoretically be uprated further, to 27 Mlbs/year, largely by expanding bottleneck backendcapacity. This expansion would make JEB the largest uranium mill in the world; froma different perspective, at that level, Denison’s 22.5% stake alone represents 6.1Mlbs/year of capacity, which by our estimates would place it within the top 10 largestconventional uranium milling operations globally.Solid Takeout Potential. With three majors in the Basin (Cameco, Rio Tinto, and Areva)and near-trough valuations, we view Denison as a likely acquisition target, particularlynow the high cost, producing US assets, which we viewed as overshadowing thecompany’s Canadian portfolio, have been divested to Energy Fuels. We believeDenison’s Wheeler, McClean/Midwest projects and interest in JEB could help Rio Tintoexpand its presence in the region, or alternatively, for Cameco to protect its dominantland/mill position and bolster its production profile. These companies also have thebalance sheet strength to move forward or even fast-track development (while Densionwould likely need significant external capital). We view Areva as more of a seller than abuyer, given its stated intention to sell, the recent sale of its Millennium stake toCameco, its development focus elsewhere (namely, Niger and Nunavut) and weakcorporate liquidity. Denison does not have a shareholder rights plan.Significant Exploration Programs. For 2012E, in addition to $4.1 mln at Wheeler,Denison plans to spend $1.0 mln at other Canadian exploration projects; ~$3 mln inMongolia, with 27,900 m of drilling (including follow-up on two discoveries made inRaymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2