Denison Mines Corp. Reports Second Quarter 2011 Results

TORONTO, ONTARIO--(Marketwire - Aug. 4, 2011) - Denison Mines Corp. ("Denison" or the "Company") (TSX:DML)(NYSE Amex:DNN) today reported its financial results for the three months and six months ended June 30, 2011.

The Company recorded a net loss of $13,749,000 or $0.04 per share for the three months ended June 30, 2011 compared with net income of $16,744,000 or $0.05 per share for the same period in 2010. For the six months ended June 30, 2011, the Company recorded a net loss of $20,816,000 or $0.06 per share compared to net income of $9,565,000 or $0.03 per share for the same period in 2010.

All amounts in this release are in U.S. dollars unless otherwise indicated.

Financial Highlights

(in thousands)			Three Months Ended June 30, 2011			Three Months Ended June 30, 2010		Six Months Ended June 30, 2011			Six Months Ended June 30, 2010
Results of Operations:
	Total revenues	$	16,993		$	27,230	$	43,761		$	49,205
	Net income (loss)		(13,749	)		16,744		(20,816	)		9,565
	Basic earnings (loss) per share		(0.04	)		0.05		(0.06	)		0.03
	Diluted earnings (loss) per share		(0.04	)		0.05		(0.06	)		0.03
								As at June 30, 2011			As at December 31, 2010
Financial Position:
	Working capital						$	120,958		$	133,837
	Long-term investments							943			2,955
	Property, plant and equipment							410,086			342,164
	Total assets							651,083			523,003
	Total long-term liabilities						$	52,603		$	38,598

Operating Highlights

• Denison's production for the quarter totaled 339,000 pounds U₃O₈ and 689,000 pounds V₂O₅.
• Uranium sales were 116,000 pounds U₃O₈ at an average price of $65.94 per pound.
• Vanadium sales totaled 801,000 pounds V₂O₅ equivalent at an average price of $6.27 per pound.
• The 2011 summer drilling program on Denison's 60% owned Wheeler River property is underway.
• Denison completed an off-market takeover offer for White Canyon Uranium Limited, a dual listed Australian Stock Exchange and Toronto Venture Exchange company.

International Financial Reporting Standards

These second quarter 2011 interim consolidated financial statements and other financial information have been prepared using International Financial Reporting Standards ("IFRS") and the Company's 2010 comparative financial statements and other financial information have been restated following its IFRS accounting policies.

Revenue

Uranium sales revenue for the second quarter was $7,693,000 from the sale of 116,000 pounds U₃O₈ at an average price of $65.94 per pound. Uranium sales for the same period in 2010 were 417,000 pounds U₃O₈ at an average price of $45.56 per pound resulting in revenue of $18,981,000.

Uranium sales revenue for the six months ended June 30, 2011 was $24,563,000 from the sale of 383,000 pounds U₃O₈ at an average price of $64.08 per pound. Uranium sales revenue for the same period in 2010 totaled $33,990,000 from the sale of 683,000 pounds U₃O₈ at an average price of $49.74 per pound.

Vanadium sales revenue for the three months ended June 30, 2011, was $5,122,000 from the sale of 801,000 pounds of V₂O₅ equivalent at an average price of $6.27 per pound. During the same period in 2010, vanadium sales revenue was $4,327,000 from the sale of 557,000 pounds of V₂O₅ equivalent at an average price of $7.20 per pound. For the six months ended June 30, 2011, vanadium sales revenue was $10,701,000 from the sale of 1,657,000 pounds V₂O₅ equivalent at an average price of $6.24 per pound compared to $6,244,000 from the sale of 841,000 pounds V₂O₅ equivalent at an average price of $6.59 per pound for the six months ended June 30, 2010.

As a result of the events in Japan, the uranium spot market demand and price have declined. In response to these weaker market conditions, Denison has deferred uranium sales to later in the year. Inventory available for sale was 570,000 pounds U₃O₈ and 145,000 pounds V₂O₅ at June 30, 2011. Based on spot prices at June 30, 2011, this inventory had a value of $31,865,000.

Revenue from the environmental services division ("DES") for the three and six months ended June 30, 2011 was $3,647,000 and $7,131,000 compared to $3,471,000 and $7,155,000 in the same periods in 2010. Revenue from the Company's management contract with Uranium Participation Corporation for the three and six months ended June 30, 2011 was $476,000 and $1,027,000 compared to $378,000 and $1,680,000 in the same periods in 2010. The decrease is due to transaction fees received in the first quarter of 2010.

Operating Expenses

The McClean Lake mill is on stand-by and there was no production during the quarter. Stand-by costs for the three and six months ended June 30, 2011 were $274,000 and $417,000 respectively.

At the White Mesa mill, uranium production totaled 339,000 pounds U₃O₈ and 689,000 pounds V₂O₅ for the three months ended June 30, 2011 and totaled 679,000 pounds U₃O₈ and 1,102,000 pounds V₂O₅ for the six months ended June 30, 2011 compared to 360,000 pounds U₃O₈ and 911,000 pounds V₂O₅ for the three months ended June 30, 2010 and 468,000 pounds U₃O₈ and 911,000 pounds V₂O₅ for the six months ended June 30, 2010.

As planned, conventional ore processing ceased at the end of June for maintenance work and is planned to resume in the fourth quarter of 2011. Alternate feed processing is continuing.

At June 30, 2011, a total of 48,600 tons of conventional ore was stockpiled at the mill containing approximately 269,000 pounds U₃O₈ and 292,000 pounds V₂O₅. The Company also has approximately 535,000 pounds U₃O₈ contained in the alternate feed material stockpiled at the mill at June 30, 2011.

U.S. production costs¹ for the three months and six months ended June 30, 2011 were $48.83 and $49.51 per pound U₃O_8. Production costs were $34.39 and $38.83 per pound U₃O₈ in the three months and six months ended June 30, 2010. The increase in unit cost is due to lower than planned mill head grades and recoveries as well as fewer pounds produced from alternate feed processing due to a change in feed source.

Other

Operating costs for the three and six months ended June 30, 2011 include a recovery of $653,000 and a write-down of $215,000 relating to the change in net realizable value on the Company's vanadium inventory. For the three and six months ended June 30, 2010 operating costs include a recovery of $2,698,000 and $9,962,000 respectively relating to the change in net realizable value provisions of the Company's uranium and vanadium inventory. Operating costs also include expenses relating to DES amounting to $3,425,000 for the three months and $6,835,000 for the six months in 2011 compared to $2,974,000 and $6,390,000 respectively for the same periods in 2010.

Mineral Property Exploration

Denison is engaged in uranium exploration, as both operator and non-operator of joint ventures and as operator of its own properties in Canada, the U.S., Mongolia and Zambia. For the three months ended June 30, 2011 exploration expenditures totaled $2,456,000 and $5,641,000 for the six months ended June 30, 2011 as compared to $1,797,000 for the three months ended June 30, 2010 and $3,494,000 for the six months ended June 30, 2010.

During the quarter, activity in the Athabasca Basin region of northern Saskatchewan was focused on the Company's 60% owned Wheeler River project. Denison's share of exploration spending on its Canadian properties totaled $993,000 for the three months ended June 30, 2011 and totaled $3,723,000 for the six months ended June 30, 2011. For the three months ended June 30, 2010, Canadian exploration spending totaled $1,709,000 and $3,125,000 for the six months ended June 30, 2010.

The 55 hole, 24,000 metre summer drilling program at Wheeler River is underway. Initial drilling in Zone A has resulted in expanding the mineralization along the northeastern boundary of the Phoenix Zone A deposit.

Exploration expenditures of $664,000 and $969,000 for the three and six months ended June 30, 2011 compared to $77,000 for the three months and $355,000 for the six months ended June 30, 2010 were incurred in Mongolia on the Company's joint venture properties. The Company has a 70% interest in the Gurvan Saihan Joint Venture ("GSJV") in Mongolia. The other parties to the joint venture are the Mongolian Government as to 15% and Geologorazvedka, a Russian entity, as to 15%. Under the Nuclear Energy Law, the Government of Mongolia could acquire a 34% to 51% interest at no cost to the Government. Discussions are underway with the Mongolian Government regarding resolution of the ownership structure of the GSJV and issuance of mining licences.

Exploration expenditures of $785,000 and $899,000 for the three and six months ended June 30, 2011 were incurred on the Company's Mutanga project in Zambia compared to $11,000 for the three and six months ended June 30, 2010. The Company completed Phase 1 and commenced Phase 2 of the 2011 drilling program. Approximately 5,790 metres were drilled in Phase 1. Drilling was completed in three zones, including Dibwe East Zones 1 and 2 and Mutanga West. The Phase 1 drilling returned a number of strongly mineralized holes from all three zones. The preliminary results of the Phase 1 drilling program in Dibwe East Zones 1 and 2 have confirmed the continuity of the mineralization identified in a 2008 drilling program with a combined strike length greater than 2.5 kilometres. The Phase 2 drilling program is planned to be a total of 11,240 metres and is aimed at further delineating and expanding the mineralization in Dibwe East Zones 1 and 2. Subject to the results of the Phase 2 drilling program, Denison intends to prepare revised mineral resource estimates for the Mutanga Project in accordance with the requirements of National Instrument 43-101 ("NI 43-101") later this year.

White Canyon Uranium Limited Acquisition

On June 17, 2011, Denison's offer to acquire all of the outstanding shares of White Canyon Uranium Limited ("WCU") closed with 96.98% of shares outstanding accepting the offer. Compulsory acquisition proceedings to acquire the remaining shares of WCU were initiated on June 20, 2011 and are expected to be completed in early August, 2011.

Denison's cash offer of AUD $0.24 per WCU share has resulted in a total purchase price of US$61,027,000 (AUD$57,163,000). Consideration for the initial 96.98% interest was paid on July 1, 2011 and payment for the remaining shares will be made in early August 2011. The full amount of the purchase price has been recorded as a payable at June 30, 2011.

WCU's key assets are located in southeastern Utah, near Denison's White Mesa mill. Its holdings comprise 100% interests in the Daneros producing mine, the Lark Royal advanced project and the Thompson, Geitus, Blue Jay and Marcy Look exploration projects, covering approximately 15,500 acres in the Red Canyon district. WCU commenced production of uranium ore in December 2009 from its 100% owned Daneros uranium mine.

Liquidity & Capital Resources

Cash and cash equivalents were $137,733,000 at June 30, 2011 compared with $97,554,000 at December 31, 2010. The increase of $40,179,000 was due primarily to cash used in operations of $11,927,000, common share issues totaling $62,402,000 and less expenditures on property, plant and equipment totaling $12,711,000.

Net cash used in operating activities of $11,927,000 during the six months ended June 30, 2011 is comprised of net loss for the period adjusted for non-cash items and for changes in working capital items. Significant changes in working capital items during the period include an increase in accounts payable and accrued liabilities of $3,762,000, an increase of $21,691,000 in inventories and a decrease of $12,699,000 in trade and other receivables.

Net cash used in investing activities was $13,561,000 consisting primarily of expenditures on property, plant and equipment of $12,711,000 and an increase in restricted cash of $3,130,000.

Net cash from financing activities totaled $62,257,000 consisting of $62,402,000 from the issue of common shares less $145,000 repayment of debt obligations.

In total, these sources and uses of cash resulted in a net cash inflow after the effect of foreign exchange of $40,179,000 during the period.

The Company has in place a revolving credit facility of $35,000,000. The facility expires on June 29, 2012. Bank indebtedness under the facility at June 30, 2011 was nil; however, $10,055,000 of the line is used as collateral for certain letters of credit.

Outlook for 2011

As a result of the acquisition of WCU, Denison has reviewed its ore processing plans for the remainder of the year. The Company currently plans to process Daneros and Arizona 1 ore in the fall of 2011 and defer processing of Colorado Plateau ore until 2012 when a longer run of uranium and vanadium ore can be attained. As a result of these ore processing changes, uranium production is expected to remain at 1.2 million pounds U₃O₈. Vanadium production, however, will be lower at 1.3 million pounds V₂O₅ down from a projected 1.7 million pounds.

Uranium sales are expected to be approximately 1.2 million pounds of U₃O₈ down from a projected 1.3 million pounds due in part to the timing of production and in part to a decision to defer some sales to 2012 as a result of current market prices. Vanadium sales are now projected to be about 1.7 million pounds V₂O₅ in 2011, down from a projected 2.1 million pounds. The decline in sales is due to lower vanadium production expectations.

Qualified Person

The disclosure of scientific and technical information regarding Denison's properties in this press release was prepared by or under the supervision of Lawson Forand, the Company's Exploration Manager Saskatchewan, and Terry Wetz, Director of Project Development, who are Qualified Persons in accordance with the requirements of NI 43-101.

Conference Call

Denison is hosting a conference call on Friday, August 5, 2011 starting at 9:00 A.M. (Toronto time) to discuss the second quarter 2011 results. The webcast will be available live through a link on Denison's website www.denisonmines.com and by telephone at 416-340-8018. A recorded version of the conference call will be available by calling 905-694-9451 (password: 2461552) approximately two hours after the conclusion of the call. The presentation will also be available at www.denisonmines.com.

Additional Information

Denison's interim financial statements for the six months ended June 30, 2011 and related management's discussion and analysis are available on Denison's website at www.denisonmines.com or under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

Additional information, including the Company's 2010 Annual Report containing the Company's consolidated financial statements and related management's discussion and analysis for its year ended December 31, 2010, and its annual information form and Form 40-F, are available on Denison's website at www.denisonmines.com or under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

About Denison

Denison Mines Corp. is an intermediate uranium producer with production in the U.S., combined with a diversified development portfolio of projects in the U.S., Canada, Zambia and Mongolia. Denison's assets include its 100% ownership of the White Mesa mill in Utah and its 22.5% ownership of the McClean Lake mill in Saskatchewan. The Company also produces vanadium as a co-product from some of its mines in Colorado and Utah. Denison owns interests in world-class exploration projects in the Athabasca Basin in Saskatchewan, including its flagship project at Wheeler River, and in the southwestern United States, Mongolia and Zambia. Denison is the manager of Uranium Participation Corporation (TSX:U), a publicly traded company which invests in uranium oxide in concentrates and uranium hexafluoride.

Cautionary Statements

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

Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur", "be achieved" or "has the potential to".

Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and they 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 from those expressed or implied by such forward-looking statements. Denison believes that the expectations reflected in this forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information included in this press release should not be unduly relied upon. This information speaks only as of the date of this press release. In particular, this press release may contain forward-looking information pertaining to the following: the estimates of Denison's mineral reserves and mineral resources; estimates regarding Denison's uranium and vanadium production levels and sales volumes; capital expenditure programs, estimated production costs, exploration and development expenditures and reclamation costs; expectations of market prices and costs; supply and demand for uranium and vanadium; possible impacts of litigation and regulatory actions on Denison; exploration, development and expansion plans and objectives; Denison's expectations regarding raising capital and adding to its mineral reserves and resources through acquisitions and development; and receipt of regulatory approvals, permits and licences and treatment under governmental regulatory regimes.

There can be no assurance that such statements will prove to be accurate, as Denison's actual results and future events could differ materially from those anticipated in this forward-looking information as a result of those factors discussed in or referred to under the heading "Risk Factors" in Denison's Annual Information Form dated March 28, 2011, available at http://www.sedar.com, and in its Form 40-F available at http://www.sec.gov, as well as the following: global financial conditions, the market price of Denison's securities, volatility in market prices for uranium and vanadium; ability to access capital, changes in foreign currency exchange rates and interest rates; liabilities inherent in mining operations; uncertainties associated with estimating mineral reserves and resources and production; uncertainty as to reclamation and decommissioning liabilities; failure to obtain industry partner and other third party consents and approvals, when required; delays in obtaining permits and licenses for development properties; competition for, among other things, capital, acquisitions of mineral reserves, undeveloped lands and skilled personnel; public resistance to the expansion of nuclear energy and uranium mining; uranium industry competition and international trade restrictions; incorrect assessments of the value of acquisitions; geological, technical and processing problems; the ability of Denison to meet its obligations to its creditors; actions taken by regulatory authorities with respect to mining activities; the potential influence of or reliance upon its business partners, and the adequacy of insurance coverage.

Accordingly, readers should not place undue reliance on forward-looking statements. These factors are not, and should not be construed as being, exhaustive. Statements relating to "mineral reserves" or "mineral resources" are deemed to be forward-looking information, as they involve the implied assessment, based on certain estimates and assumptions that the mineral reserves and mineral resources described can be profitably produced in the future. The forward-looking information contained in this press release is expressly qualified by this cautionary statement. Denison does not undertake any obligation to publicly update or revise any forward-looking information after the date of this press release to conform such information to actual results or to changes in Denison's expectations except as otherwise required by applicable legislation.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This press release may use the terms "Measured", "Indicated" and "Inferred" 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.

¹ Production costs, which is a non-gaap measure, include the costs of mining the ore fed to the mill in the period plus the costs of milling the ore less a credit for vanadium produced in the period and excluding depreciation and amortization.