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

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Canada Research | Page 40 of 87UraniumExhibit 54: Financial StatementsUS$000s (Fiscal year-end Dec-31) 2011A 2012E 2013E 2014EIncome StatementRevenue 96,800 56,044 18,351 19,256Operating Expenses (181,172) (60,965) (100) (100)SG&A, Forex (49,130) (39,023) (35,256) (34,088)Mineral Write-offs 0 0 0 0Other 67,782 (25,433) 0 0EBITDA (65,720) (69,377) (17,005) (14,932)DD&A (6,150) (4,223) (2,000) (2,000)EBIT (71,870) (73,600) (19,005) (16,932)Interest income (expense) (38) (38) 0 0Tax recovery (expense) 1,039 754 0 0Net Income (70,869) (72,884) (19,005) (16,932)Weighted Avg. S/O ('000s) 380,838 384,480 385,246 408,672Adjusted EPS (US$/sh; basic) (0.13) (0.07) (0.05) (0.04)Cash FlowOperating (19,983) (23,001) (17,005) (14,932)Investing (85,744) (8,136) (13,200) (52,100)Financing 62,261 230 6,610 67,032Net Change in Cash (net FX) (44,039) (29,920) (23,595) 0CFPS (US$/sh; w/o WC) (0.05) (0.06) (0.04) (0.04)Cash (EOP) 53,515 23,595 (0) (0)Balance SheetCurrent Assets 104,807 80,191 56,596 56,596Non-current Assets 399,679 358,244 369,444 419,544Total Assets 504,486 438,435 426,040 476,140Current Liabilities 11,291 12,433 12,433 12,433Non-current Liabilities 38,391 38,326 38,326 38,326Total Liabilities 49,682 50,759 50,759 50,759Deficit, other comp income (loss) (568,679) (636,428) (655,433) (672,364)Shareholder Equity 1,023,483 1,024,104 1,030,714 1,097,745Total Liabilities + Equity 504,486 438,435 426,040 476,140Source: Raymond James Ltd., Denison Mines Corp.Raymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
Uranium Canada Research | Page 41 of 87Exhibit 55: Financial and Operational Snapshot of Denison MinesDenison Mines Corp.RAYMOND JAMES LTD. RESEARCH Analyst: David Sadowski 604 659 8255Rating: Market Perform 3 DML-T david.sadowski@raymondjames.ca6-12 Mth Target C$ 1.80 NAV $1.95 Reporting currency: USD 18-Jul-12Projected Return: 35.3% YR-END: Dec 31 Market StatisticsShare Price C$ 1.33 Shares Basic (mln) 384.7Investment Thesis 52 Week High 2.08 Shares Fully Diluted (mln) 391.3- A more focused company, post sale of producing U.S. assets to Energy Fuels 52 Week Low 0.87 Adj. Shares used in NAV calc (mln) 391.3- Controlling interest in Wheeler River - one of the best uranium discoveries this cycle Market Cap. (mln) 512 Avg Daily Volume: 788,510- Strong exploration upside in Canada, Mongolia and Zambia Enterprise Value (mln) 494 Annualized Dividend $0.00Total model'd lb. in DCF (mln) 107.8 Div Yield % 0.0%Key Attributes:- One of few Canadian companies operating in Northern Saskatchewan Financial Metrics 2011A 2012E 2013E 2014E 2015E- Fully permitted for production (likely open pit) in Zambia Cash ($ mln) 53.5 23.6 0.0 0.0 0.0- 22.5% interest in the scalable, state-of-the-art, high-grade-ready McClean Lake mill Working capital ($ mln) 93.5 67.8 44.2 44.2 44.2- Operator of Uranium Participation Corp., the world's only physical U fund Current ratio (x) 9.3 6.4 4.6 4.6 4.6LT Debt ($ mln) 1.1 1.1 1.1 1.1 1.1Key Concerns Common Equity (mln) 454.8 387.7 375.3 425.4 621.6- Denison does not have direct control over Canadian assets due to minority interests Price/book (x) 1.0 1.2 1.3 1.2 1.0- Permitting risk in Saskatchewan and Mongolia; financing risk LTD/(LTD + Equity) 0.2% 0.3% 0.3% 0.3% 0.2%ROE -16% -19% -5% -4% -1%Interest Tonnes Grade U3O8 Denison ROIC -14% -17% -4% -4% -1%(%) ('000 t) (% U3O8) ('000lbs) ('000lbs)Probable Reserves Earnings/Cash Flow 2011A 2012E 2013E 2014E 2015EMcClean (Ore Stockpile) 23% 94 0.37% 751 169 RJ Uranium Forecast US$/lb 57.09 53.50 63.00 72.50 75.00Measured & Indicated (%) ('000 t) (% U3O8) ('000lbs) ('000lbs) Revenue ($mln) 96.8 56.0 18.4 19.3 49.2Caribou 23% 40 3.13% 2,724 613 EBITDA ($mln) -65.8 -69.4 -17.0 -14.9 2.8Sue D 23% 123 1.05% 2,840 639 EBITDA margin -0.7 -1.2 -0.9 -0.8 0.1McClean North 23% 207 2.75% 12,549 2,823 EV/EBITDA (x) nm nm nm nm 178.7Midwest 25% 354 5.50% 42,900 10,800 EBIT ($mln) -71.9 -73.6 -19.0 -16.9 -2.9Midwest A 25% 464 0.57% 5,800 1,460 Adj. Net earnings ($mln) -70.9 -72.9 -19.0 -16.9 -4.3Phoenix 60% 90 18.00% 35,638 21,383 Adj. EPS ($/sh) -0.13 -0.07 -0.05 -0.04 -0.01Hairhan (Mongolia) 66% 12,261 0.07% 19,780 13,055 P/E (x) nm nm nm nm nmMutanga (Zambia) 100% 10,300 0.03% 7,800 7,800 Operating Cash Flow ($mln) -20.0 -23.0 -17.0 -14.9 1.445% 23,838 0.25% 130,031 58,573 CFPS ($/sh) -0.05 -0.06 -0.04 -0.04 0.00Inferred P/CF (x) nm nm nm nm 522.6Sue E 23% 483 0.69% 7,300 1,643 Capex ($mln) -24.3 -7.4 -13.2 -52.1 -201.9Sue D 23% 24 0.39% 209 47McClean North 23% 3 0.79% 58 13 Unfunded Valuation (C$) C$'000 $/share % of Total AssetsMidwest 25% 25 0.80% 400 101 FinancialMidwest A 25% 9 21.23% 4,300 1,082 Working Capital (1Q12A) 87.8 0.22 11.5%Phoenix 60% 24 7.30% 3,811 2,287 Additional Capital 12.2 0.03 1.6%Hairhan (Mongolia) 66% 5,536 0.05% 5,811 3,835 LT Liabilities (1.1) (0.00) -0.1%Mutanga (Zambia) 100% 68,500 0.03% 42,100 42,100 SG&A (52.7) (0.13) -6.9%80% 74,605 0.04% 63,989 51,108 46.3 0.12 6.1%OperationalTotal 43-101 56% 98,537 0.09% 194,771 109,850 CanMcClean Lake Mill (replacement) 213.8 0.55 28.0%Total 43-101 in Canada 36% 1,940 2.79% 119,280 43,060 CanWheeler River (DCF; 8%) 230.4 0.59 30.2%Historic 74% 164,725 0.06% 215,298 159,052 CanCdn Expl Assets ($/lb, cost) 106.0 0.27 13.9%Global Resources 66% 263,262 0.07% 410,069 268,902 MoGurvan Saihan, Mongolia (DCF; 8%) 75.9 0.19 10.0%ZamMutanga, Zambia (DCF; 8%) 55.6 0.14 7.3%Operating Summary 2011A 2012E 2013E 2014E 2015E 716 1.83 93.9%U3O8 (mln lb) 0.0 0.0 0.0 0.0 0.4 NAV 762 1.95 100%Total Cash Costs ($/lb) 0.0 0.0 0.0 0.0 29.5EV/Prodn U3O8 nm nm nm nm $1,196 Implied Target CurrentValuation Measures Multiple MultipleProduction (Mlbs U3O8)10864202011A2012E2013E2014EDenison's Production Profile2015E2016E2017E2018E2019E2020E2021EWheeler Mongolia Zambia2022E35302520151050Cash Cost (US$/lb U3O8)Price/NAVPS 0.9 0.7Price/2013E CFPS (x) nm nmTarget Price C$: C$ 1.80NAV Exposure by Country, 20127%10%72%CanadaMongoliaZambia1.21.00.80.60.4P/NAV1.150.870.68 0.720.630.33US$/lb10.08.06.04.0EV/Resources44.558.24 8.252.870.20.0URE PDN DML UUU U CCO2.00.01.720.59URE DML PDN CCO UUU USource: Raymond James Ltd., UxC, Thomson One, Capital IQ, Denison Mines CorpRaymond James Ltd. | 2200 – 925 West Georgia Street | Vancouver BC Canada V6C 3L2
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