Form 6-K DENISON MINES CORP. For: Nov 03

Form 6-K DENISON MINES CORP. For: Nov 03

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November 4, 2016 2:05 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

Date: November 4, 2016

Commission File Number: 001-33414

Denison Mines Corp.

(Translation of registrant’s name into English)

1100-40 University Avenue, Toronto Ontario, M5J 1T1 Canada

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☐ Form 40-F ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EXHIBIT INDEX

Exhibit Number		Description

99.1 99.2 99.3 99.4 99.5		Condensed Interim Consolidated Financial Statements at September 30, 2016 Management's Discussion and Analysis for the three and nine months ended September 30, 2016 Certification of Interim Filings - CEO Certification of Interim Filings - CFO Press release dated November 3, 2016

Condensed Interim Consolidated Statements of Financial Position (Unaudited - Expressed in thousands of U.S. dollars except for share amounts)
		At September 30 2016		At December 31 2015
ASSETS
Current
Cash and cash equivalents (note 6)	$	11,829	$	5,367
Investments (note 9)		616		7,282
Trade and other receivables (note 7)		13,222		4,826
Inventories (note 8)		2,385		2,256
Prepaid expenses and other		322		619
		28,374		20,350
Non-Current
Inventories-ore in stockpiles (note 8)		1,599		1,515
Investments (note 9)		3,525		496
Investments in associates (note 10)		4,239		-
Restricted cash and investments (note 11)		2,456		2,040
Property, plant and equipment (note 12)		190,408		188,250
Intangibles		-		107
Total assets	$	230,601	$	212,758

LIABILITIES
Current
Accounts payable and accrued liabilities	$	5,430	$	4,574
Current portion of long-term liabilities:
Post-employment benefits (note 13)		229		217
Reclamation obligations (note 14)		659		624
Debt obligations		-		300
Other liabilities (note 16)		1,890		1,863
		8,208		7,578
Non-Current
Post-employment benefits (note 13)		2,260		2,172
Reclamation obligations (note 14)		20,254		18,836
Other liabilities (note 16)		657		652
Deferred income tax liability		15,733		16,465
Total liabilities		47,112		45,703

EQUITY
Share capital (note 17)		1,137,777		1,130,779
Contributed surplus		54,226		53,965
Deficit		(951,442)		(944,097)
Accumulated other comprehensive loss (note 19)		(57,072)		(73,592)
Total equity		183,489		167,055
Total liabilities and equity	$	230,601	$	212,758

Issued and outstanding common shares (note 17)		533,418,993		518,438,669
Going concern basis of accounting (note 2) Subsequent Event (note 25)



The accompanying notes are integral to the condensed interim consolidated financial statements


Condensed Interim Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(Unaudited - Expressed in thousands of U.S. dollars except for share and per share amounts)
		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
		2016		2015		2016		2015

REVENUES (note 21)	$	3,489	$	3,526	$	10,482	$	8,783

EXPENSES
Operating expenses (note 20)		(2,553)		(2,619)		(7,625)		(6,813)
Exploration and evaluation (note 21)		(3,308)		(3,753)		(10,037)		(12,007)
General and administrative (note 21)		(1,020)		(1,942)		(3,287)		(4,592)
Impairment of mineral properties (note 12)		(79)		-		(2,253)		-
Foreign exchange		481		758		(1,687)		909
Other income (expense) (note 20)		519		64		767		(606)
		(5,960)		(7,492)		(24,122)		(23,109)
Loss before finance charges		(2,471)		(3,966)		(13,640)		(14,326)
Finance expense (note 20)		(226)		(198)		(595)		(505)
Loss before taxes		(2,697)		(4,164)		(14,235)		(14,831)
Income tax recovery (expense) (note 23)
Deferred		191		556		3,452		3,388
Loss from continuing operations		(2,506)		(3,608)		(10,783)		(11,443)
Net income (loss) from discontinued operations (note 5)		9,050		(17,824)		3,438		(23,917)
Net income (loss) for the period	$	6,544	$	(21,432)	$	(7,345)	$	(35,360)

Other comprehensive income (loss):
Items that may be reclassified to income (loss):
Unrealized gain on investments-net of tax
Continuing operations		1		1		6		1
Foreign currency translation change
Continuing operations		(3,145)		(14,414)		10,294		(31,586)
Discontinued operations		-		9,283		6,220		10,642
Comprehensive income (loss) for the period	$	3,400	$	(26,562)	$	9,175	$	(56,303)


Basic and diluted net income (loss) per share:
Continuing operations		-		(0.01)		(0.02)		(0.02)
Discontinued operations		0.01		(0.03)		0.01		(0.05)
All operations	$	0.01	$	(0.04)	$	(0.01)	$	(0.07)


Weighted-average number of shares outstanding (in thousands):
Basic		533,419		518,439		525,953		511,740
Diluted		533,464		518,439		525,953		511,740

The accompanying notes are integral to the condensed interim consolidated financial statements


Condensed Interim Consolidated Statements of Changes in Equity
(Unaudited - Expressed in thousands of U.S. dollars)
		Nine Months Ended
		September 30		September 30
		2016		2015

Share capital
Balance-beginning of period	$	1,130,779	$	1,120,758
Shares issued-net of issue costs		8,841		11,318
Flow-through share premium		(1,843)		(2,028)
Share options exercised-cash		-		5
Share options exercised-non cash		-		4
Share purchase warrants exercised-cash		-		406
Share purchase warrants exercised-non cash		-		316
Balance-end of period		1,137,777		1,130,779

Share purchase warrants
Balance-beginning of period		-		376
Warrants exercised		-		(316)
Warrants expired		-		(60)
Balance-end of period		-		-

Contributed surplus
Balance-beginning of period		53,965		53,321
Stock-based compensation expense		261		467
Share options exercised-non cash		-		(4)
Warrants expired		-		60
Balance-end of period		54,226		53,844

Deficit
Balance-beginning of period		(944,097)		(892,537)
Net loss		(7,345)		(35,360)
Balance-end of period		(951,442)		(927,897)

Accumulated other comprehensive loss
Balance-beginning of period		(73,592)		(25,859)
Unrealized gain on investments		6		1
Foreign currency translation realized in net income		(637)		(10)
Foreign currency translation		17,151		(20,934)
Balance-end of period		(57,072)		(46,802)


Total Equity
Balance-beginning of period		167,055		256,059
Balance-end of period	$	183,489	$	209,924

The accompanying notes are integral to the condensed interim consolidated financial statements


Condensed Interim Consolidated Statements of Cash Flow
(Unaudited - Expressed in thousands of U.S. dollars)
		Nine Months Ended
		September 30		September 30
CASH PROVIDED BY (USED IN):		2016		2015

OPERATING ACTIVITIES
Net loss for the period	$	(7,345)	$	(35,360)
Items not affecting cash:
Depletion, depreciation, amortization and accretion		2,974		2,511
Impairment of mineral properties (note 12)		2,253		-
Stock-based compensation (note 18)		261		467
Loss on divestiture of Africa Mining Division (note 5)		70		-
Gain on divestiture of Mongolia Mining Division (note 5)		(9,050)		-
Gains on asset disposals		(51)		(67)
Losses (gains) on investments		(1,017)		423
Deferred income tax recovery		(3,452)		(3,388)
Foreign exchange losses		6,841		20,551
Change in non-cash working capital items (note 20)		993		(138)
Net cash used in operating activities		(7,523)		(15,001)

INVESTING ACTIVITIES
Divestiture of asset group, net of cash and cash equivalents divested:
Africa Mining Division (note 5)		(798)		-
Sale and maturity of investments		7,785		4,033
Purchase of investments		(500)		(8,134)
Expenditures on property, plant and equipment		(1,083)		(1,871)
Proceeds on sale of property, plant and equipment		55		97
Increase in restricted cash and investments		(280)		(442)
Net cash provided by (used in) investing activities		5,179		(6,317)

FINANCING ACTIVITIES
Decrease in debt obligations		(313)		(21)
Issuance of common shares for:
New share issues-net of issue costs		8,841		11,318
Share options exercised		-		5
Share purchase warrants exercised		-		406
Net cash provided by financing activities		8,528		11,708

Increase (decrease) in cash and cash equivalents		6,184		(9,610)
Foreign exchange effect on cash and cash equivalents		278		(1,969)
Cash and cash equivalents, beginning of period		5,367		18,640
Cash and cash equivalents, end of period	$	11,829	$	7,061

The accompanying notes are integral to the condensed interim consolidated financial statements


Notes to the Condensed Interim Consolidated Financial Statements for the nine months ended September 30, 2016
(Unaudited - Expressed in U.S. dollars except for shares and per share amounts)

NATURE OF OPERATIONS

Denison Mines Corp. and its subsidiary companies and joint arrangements (collectively, the “Company”) are engaged in uranium mining related activities, including acquisition, exploration and development of uranium bearing properties, extraction, processing and selling of uranium.

The Company has a 60% interest in the Wheeler River Joint Venture (“WRJV”), a 22.5% interest in the McClean Lake Joint Venture (“MLJV”) (which includes the McClean Lake mill) and a 25.17% interest in the Midwest Joint Venture (“MWJV”), each of which are located in the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada. The McClean Lake mill provides toll milling services to the Cigar Lake Joint Venture (“CLJV”) under the terms of a toll milling agreement between the parties. In addition, the Company has varying ownership interests in a number of other development and exploration projects located in Canada.

The Company provides mine decommissioning and decommissioned site monitoring services to third parties through its Denison Environmental Services (“DES”) division and is also the manager of Uranium Participation Corporation (“UPC”), a publicly-listed investment holding company formed to invest substantially all of its assets in uranium oxide concentrates (“U3O8”) and uranium hexafluoride (“UF6”). The Company has no ownership interest in UPC but receives fees for management services and commissions from the purchase and sale of U3O8 and UF6 by UPC.

Denison Mines Corp. (“DMC”) is incorporated under the Business Corporations Act (Ontario) and domiciled in Canada. The address of its registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario, Canada, M5J 1T1.

GOING CONCERN BASIS OF ACCOUNTING

These condensed interim consolidated financial statements have been prepared using International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), on a going concern basis, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months.

At September 30, 2016, the Company has sufficient liquidity on hand to fund its planned operations for the fiscal 2016 year. However, in the absence of additional funding, the Company anticipates that it will become non-compliant with the minimum cash covenant requirement of its letters of credit facility in 2017 and, as a result, there is substantial doubt upon the Company’s ability to realize its assets and discharge its liabilities in the normal course of business, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. In order to both fund operations and maintain rights under existing agreements, the Company must secure sufficient future funding. The Company is actively pursuing access to different sources of funding and while it has been successful in the past in obtaining financing for its activities, there is no assurance that it will be able to obtain adequate financing in the future.

These financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary if the Company ceases to exist as a going concern in the normal course of operations. Such adjustments could be material.

BASIS OF PRESENTATION

These condensed interim consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB applicable to the preparation of interim financial statements, including IAS 34, Interim Financial Reporting. The condensed interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2015. The Company’s presentation currency is U.S. dollars.

These financial statements were approved by the board of directors for issue on November 3, 2016.

SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed in these condensed interim consolidated financial statements are consistent with those applied in the Company’s audited annual consolidated financial statements for the year ended December 31, 2015. In accounting for investments in associates, the Company uses the following accounting policy:

(a)

Investment in Associates

An associate is an entity over which the Company has significant influence and is neither a subsidiary, nor an interest in a joint operation. Significant influence is the ability to participate in the financial and operating policy decisions of the entity without having control or joint control over those policies.

Associates are accounted for using the equity method. Under this method, the investment in associates is initially recorded at cost and adjusted thereafter to record the Company’s share of post-acquisition earnings or loss of the associate as if the associate had been consolidated. The carrying value of the investment is also increased or decreased to reflect the Company’s share of capital transactions, including amounts recognized in other comprehensive income, and for accounting changes that relate to periods subsequent to the date of acquisition.

Comparative Numbers – Change in Presentation due to Discontinued Operations

The fiscal 2015 financial information has been represented to reflect income and expense of the Company’s discontinued operations in one single separate line item in the consolidated statement of comprehensive income (loss) and the related supplemental note disclosure has been revised accordingly. The consolidated statements of financial position and the consolidated statement of cash flows have not been revised. See note 5 for more information.

DISCONTINUED OPERATIONS

Discontinued Operation – Africa Mining Division

On June 10, 2016, the Company completed a transaction with GoviEx Uranium Inc. (“GoviEx”) to sell its mining assets and operations located in Africa (the “Africa Mining Division”). The primary assets of the African Mining Division were the mineral property rights for the Falea, Mutanga and Dome projects.

Under the terms of the transaction, GoviEx acquired Denison’s wholly owned subsidiary, Rockgate Capital Corp, which held all of the assets of the African Mining Division, in exchange for 56,050,450 common shares (the “Consideration Shares”) of GoviEx plus 22,420,180 share purchase warrants (the “Consideration Warrants”). Each Consideration Warrant is convertible into one common share of GoviEx for a period of three years at a price of $0.15 per share. The Consideration Warrants include an acceleration clause based on GoviEx’s share price, which, if triggered, give the holders 30 days within which to exercise the Consideration Warrants under the terms outlined above. If the holders do not exercise within that period, the exercise price of the Consideration Warrants increases to $0.18 per share and the term is reduced by six months.

As conditions to the closing of the transaction, Denison ensured that the Africa Mining Division was capitalized with a minimum working capital of $700,000 and GoviEx completed a concurrent equity financing of not less than $2,000,000. Under the concurrent equity financing by GoviEx, Denison acquired an additional 9,093,571 units of GoviEx for $500,000. Each unit consists of one common share (“Concurrent Share”) and one common share purchase warrant (“Concurrent Warrant”). Each Concurrent Warrant is convertible into one common share of GoviEx for a period of three years at a price of $0.12 per share until June 10, 2018 and $0.14 per share thereafter. The Concurrent Warrants include and acceleration clause based on GoviEx’s share price, which, if triggered, give the holders 60 days within which to exercise the Concurrent Warrants under the terms outlined above. If the holders do not exercise within that period, the Concurrent Warrants will expire unexercised.

Following the completion of the transaction and equity financing, Denison holds 65,144,021 of the outstanding shares of GoviEx (or approximately 24.6% of GoviEx’s issued and outstanding shares at June 10, 2016) and it is entitled to appoint one director to the GoviEx board so long as its share interest in GoviEx is 5% or higher.

Denison has reported the value attributed to the Consideration Warrants and the Concurrent Warrants as a component of “Investments” (see note 9) while the value attributed to the Consideration Shares and the Concurrent Shares is reported within “Investment in Associates” (see note 10). Denison is accounting for its share investment in GoviEx using the equity method.

The details of the net assets of the African Mining Division sold to GoviEx on June 10, 2016 were as follows:

(in thousands, except share amounts)

Consideration received at fair value:
Fair value of 56,050,450 GoviEx Consideration Shares received	$	3,954
Fair value of 22,420,180 GoviEx Consideration Warrants received		1,162
Transaction costs		(138)
Consideration received at fair value	$	4,978

Net assets disposed of at carrying value:
Cash and cash equivalents	$	(660)
Prepaid and other current assets		(109)
Property, plant and equipment
Plant and equipment		(258)
Mineral properties-Mali, Namibia and Zambia		(3,427)
Total assets		(4,454)

Accounts payable and accrued liabilities		43
Net assets disposed of at carrying value	$	(4,411)

Cumulative foreign currency loss translation adjustment realized in income		(637)

Loss on disposal of Africa Mining Division	$	(70)

The fair value of the GoviEx Consideration Shares received was determined using GoviEx’s closing share price on June 10, 2016 of CAD$0.09 per share converted to USD using the June 10, 2016 foreign exchange rate of 0.7839.

The fair value of the GoviEx Consideration Warrants received totaled $1,162,000 or $0.0518 per warrant. The fair value was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 0.50%, expected stock price volatility of 151.97%, expected life of 3.0 years and expected dividend yield of nil%. No adjustment has been made for the acceleration clause included in the Consideration Warrants.

The loss on disposal of $70,000 includes $637,000 of cumulative foreign currency losses recognized as translational foreign exchange losses in the period of disposal.

The consolidated statement of income (loss) for the Africa Mining Division discontinued operation for the three and nine months ended September 30, 2016 and 2015 is as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Expenses
Operating expenses	$	-	$	(79)	$	(64)	$	(241)
Exploration and evaluation		-		(153)		(74)		(677)
General and administrative		-		(136)		(280)		(504)
Foreign exchange income (expense)
Transactional		-		(18,012)		(5,154)		(24,311)
Translational		-		-		-		(10)
Other income (expense)
Gains on disposal of plant and equipment		-		-		49		47
Loss on disposal		-		-		(70)		-
Other		-		-		(19)		-
		-		(18,380)		(5,612)		(25,696)
Net loss for the period	$	-	$	(18,380)	$	(5,612)	$	(25,696)

Cash flows for the Africa Mining Division discontinued operation for the nine months ended September 30, 2016 and 2015 is as follows:

		Nine Months Ended
		September 30		September 30
(in thousands)		2016		2015

Cash inflow (outflow):
Operating activities	$	(442)	$	(1,118)
Investing activities		(822)		(193)
Net cash outflow for the period	$	(1,264)	$	(1,311)

Discontinued Operation - Sale of Mongolia Mining Division

On November 30, 2015, the Company completed a transaction with Uranium Industry a.s (“Uranium Industry”) to sell the Company’s mining assets and operations located in Mongolia (the “Mongolia Mining Division”). The primary assets of the Mongolia Mining Division were the exploration licenses for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects.

As consideration for the sale, the Company received cash consideration of $1,250,000 prior to closing and the rights to receive additional contingent consideration of $12,000,000. The contingent consideration is payable as follows:

●

$5,000,000 (the “First Contingent Payment”) within 60 days of the issuance of a mining license for an area covered by any of the exploration licenses in the Mongolia Mining Division (the “First Project”);

●

$5,000,000 (the “Second Contingent Payment”) within 60 days of the issuance of a mining license for an area covered by any of the other exploration licenses held by the Mongolia Mining Division (the “Second Project”);

●

$1,000,000 (the “Third Contingent Payment”) within 365 days following the production of an aggregate of 1,000 pounds U3O8 from the operation of the First Project; and

●

$1,000,000 (the “Fourth Contingent Payment”) 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, Uranium Industry submitted applications for mining licenses for all four projects to the Mongolian government and on January 5, 2016, the Company received copies of mining application acknowledgement receipts, for all four projects, as part of the completeness review component of the mining license issuance process.

On July 22, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) issued letters to the Gurvan Saihan Joint Venture (“GSJV”) notifying it of its intention to grant mining licenses to the GSJV for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects. On September 20, 2016, the mining license certificates for all four projects were formally issued.

The fair value of the receivable for contingent consideration related to the issuance of mining licenses has been increased from $nil at December 31, 2015 to $10,000,000 as at September 30, 2016, in conjunction with the formal issue of mining licenses, and a corresponding increase in the gain on the disposal has been recognized. The contingent consideration related to the achievement of certain production thresholds continues to be fair valued at $nil and will be re-measured at each subsequent reporting date.

The consolidated statement of income (loss) for the Mongolia Mining Division discontinued operation for the three and nine months ended September 30, 2016 and 2015 is as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Expenses
Operating expenses	$	-	$	(3)	$	-	$	(15)
Exploration and evaluation		-		(13)		-		(381)
General and administrative		-		(388)		-		(707)
Foreign exchange income (expense)
Transactional		-		960		-		2,861
Other income (expense)
Gains on disposal of plant and equipment		-		-		-		20
Gain on disposal		9,050		-		9,050		-
		9,050		556		9,050		1,778
Income before finance charges		9,050		556		9,050		1,778
Finance income		-		-		-		1
Net income for the period	$	9,050	$	556	$	9,050	$	1,779

The gain on disposal of $9,050,000 includes the fair value of the contingent consideration related to the issuance of mining licenses net of accruals for additional transaction costs.

Cash flows for the Mongolia Mining Division discontinued operation for the nine months ended September 30, 2016 and 2015 is as follows:

		Nine Months Ended
		September 30		September 30
(in thousands)		2016		2015

Cash inflow (outflow):
Operating activities	$	-	$	(1,091)
Investing activities		-		(166)
Net cash outflow for the period	$	-	$	(1,257)

CASH AND CASH EQUIVALENTS

The cash and cash equivalent balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Cash	$	4,938	$	3,092
Cash in MLJV and MWJV		1,408		9
Cash equivalents		5,483		2,266
	$	11,829	$	5,367

TRADE AND OTHER RECEIVABLES

The trade and other receivables balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Trade receivables	$	2,926	$	1,860
Receivable - Mongolia Division disposal (note 5)		10,000		-
Receivables in MLJV and MWJV		198		2,824
Sales tax receivables		92		8
Sundry receivables		6		134
	$	13,222	$	4,826

INVENTORIES

The inventories balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Uranium concentrates and work-in-progress	$	401	$	380
Inventory of ore in stockpiles		1,599		1,515
Mine and mill supplies in MLJV		1,984		1,876
	$	3,984	$	3,771

Inventories-by balance sheet presentation:
Current	$	2,385	$	2,256
Long-term-ore in stockpiles		1,599		1,515
	$	3,984	$	3,771

INVESTMENTS

The investments balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Investments:
Debt instruments-fair value through profit and loss	$	-	$	7,282
Equity instruments-fair value through profit and loss		4,123		484
Equity instruments-available for sale		18		12
	$	4,141	$	7,778

Investments-by balance sheet presentation:
Current	$	616	$	7,282
Long-term		3,525		496
	$	4,141	$	7,778

During the nine months ended September 30, 2016, Denison has recorded equity instrument additions with a cost of $2,619,000. Of this, $1,377,000 relates to GoviEx Consideration and Subscription warrants (see note 5) while $1,242,000 relates to shares of Skyharbour Resources Ltd received pursuant to an option agreement involving Denison’s Moore Lake property (see note 12).

10.

INVESTMENT IN ASSOCIATES

The investment in associates balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Investment in associates-by investee:
GoviEx	$	4,239	$	-
	$	4,239	$	-

A summary of the investment in GoviEx is as follows:

(in thousands)

Balance-December 31, 2015	$	-
Investment at cost:
Acquisition of 56,050,450 Consideration Shares (note 5)		3,954
Purchase of 9,093,571 Concurrent Shares (note 5)		285
Balance-September 30, 2016	$	4,239

GoviEx is a mineral resource company focused on the exploration and development of its uranium properties located in Africa. GoviEx maintains a head office is located in Canada and is a public company listed on the TSX Venture Exchange. Denison holds a 24.6% interest in GoviEx and has one director appointed to the GoviEx board of directors. Through the extent of its share ownership interest and its seat on the board of directors, Denison has the ability to exercise significant influence over GoviEx and accordingly, is using the equity method to account for this investment.

An adjustment for Denison’s share of GoviEx’s post-acquisition earnings or loss / capital transactions has not yet been made as these adjustments are recorded one quarter in arrears due to the information not yet being publicly available.

The trading price of GoviEx on September 30, 2016 was CAD$0.14 per share which corresponds to a quoted market value of CAD$9,120,000 ($6,953,000) for the Company’s investment in GoviEx.

The following table is a summary of the consolidated financial information of GoviEx on a 100% basis taking into account adjustments made by Denison for equity accounting purposes for fair value adjustments and differences in accounting policy. A reconciliation of GoviEx’s summarized information to Denison’s investment carrying value is also included.

		At June 30
(in thousands)		2016

Net assets of GoviEx:
Total current assets	$	2,701
Total non-current assets		23,952
Total current liabilities		(430)
Total non-current liabilities		(8,983)
Net assets of GoviEx	$	17,240

Reconciliation of GoviEx net assets to Denison investment carrying value:
Net assets of GoviEx – at acquisition	$	17,240
Denison ownership interest		24.59%
Denison share of net assets		4,239
Investment in GoviEx	$	4,239

11.

RESTRICTED CASH AND INVESTMENTS

The Company has certain restricted cash and investments deposited to collateralize a portion of its reclamation obligations. The restricted cash and investments balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Cash	$	371	$	234
Investments		2,085		1,806
	$	2,456	$	2,040

Restricted cash and investments-by item:
Elliot Lake reclamation trust fund	$	2,353	$	2,040
Reclamation letter of credit collateral		103		-
	$	2,456	$	2,040

Elliot Lake Reclamation Trust Fund

During the nine months ended September 30, 2016, the Company deposited an additional $555,000 (CAD$762,000) into the Elliot Lake Reclamation Trust Fund and withdrew $387,000 (CAD$508,000).

Reclamation Letter of Credit Collateral

During the nine months ended September 30, 2016, the Company deposited CAD$135,000 with the Bank of Nova Scotia as cash collateral in respect of the portion of its issued reclamation letters of credit in excess of the collateral available under its line of credit collateral (see notes 14 and 15).

12.

PROPERTY, PLANT AND EQUIPMENT

The property, plant and equipment balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Plant and equipment:
Cost	$	75,251	$	72,716
Construction-in-progress		5,021		4,542
Accumulated depreciation		(12,991)		(11,640)
Net book value	$	67,281	$	65,618

Mineral properties:
Cost	$	123,302	$	122,797
Accumulated amortization		(175)		(165)
Net book value	$	123,127	$	122,632
Total net book value	$	190,408	$	188,250

The property, plant and equipment continuity summary is as follows:

				Accumulated
				Amortization /		Net
(in thousands)		Cost		Depreciation		Book Value

Plant and equipment:
Balance-December 31, 2015	$	77,258	$	(11,640)	$	65,618
Additions		389		-		389
Amortization		-		(105)		(105)
Asset divestitures (note 5)		(1,358)		1,100		(258)
Depreciation		-		(2,031)		(2,031)
Disposals		(308)		304		(4)
Reclamation adjustment (note 14)		71		-		71
Foreign exchange		4,220		(619)		3,601
Balance-September 30, 2016	$	80,272	$	(12,991)	$	67,281

Mineral properties:
Balance-December 31, 2015	$	122,797	$	(165)	$	122,632
Additions		696		-		696
Asset divestitures (note 5)		(3,427)		-		(3,427)
Impairment		(2,253)		-		(2,253)
Recoveries		(1,242)		-		(1,242)
Foreign exchange		6,731		(10)		6,721
Balance-September 30, 2016	$	123,302	$	(175)	$	123,127

Plant and Equipment

Canada Mining Segment

The Company has a 22.5% interest in the McClean Lake mill located in the Athabasca Basin of Saskatchewan, Canada. A toll milling agreement has been signed with the participants in the CLJV that provides for the processing of the future output of the Cigar Lake mine at the McClean Lake mill, for which the owners of the McClean Lake mill receive a toll milling fee and other benefits. In determining the units of production amortization rate for the McClean Lake mill, the amount of production attributable to the mill assets has been adjusted to include Denison’s expected share of mill feed related to the CLJV toll milling contract.

DES

The environmental services division of the Company provides mine decommissioning and decommissioned site monitoring services for third parties.

Mineral Properties

As at September 30, 2016, the Company has various interests in development and exploration projects located in Canada which are held directly or through option or various contractual agreements.

Canada Mining Segment

In January 2016, the Company entered into an option agreement with CanAlaska Uranium Ltd (“CanAlaska”) to earn an interest in CanAlaska’s Moon Lake South project located in the Athabasca Basin in Saskatchewan. Under the terms of the option, Denison can earn an initial 51% interest in the project by spending CAD$200,000 by December 31, 2017 and it can increase its interest to 75% by spending an additional CAD$500,000 by December 31, 2020. As at September 30, 2016, the Company has spent CAD$129,000 towards the first stage of the option.

In July 2016, the Company announced the execution of an agreement to option its 100% interest in the Moore Lake property to Skyharbour Resources Ltd (“Skyharbour”) in exchange for cash, stock and exploration spending commitments. Under the terms of the option, Denison is entitled to receive 4,500,000 common shares of Skyharbour on closing. To complete the option, Skyharbour is required to make staged cash payments of CAD$500,000 in aggregate over the next five years and spend CAD$3,500,000 in exploration expenditures on the property over the same five year period.

Under the terms of the option agreement, Denison also maintains various back-in rights to re-acquire a 51% interest in the Moore Lake 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%. As at September 30, 2015, Denison’s ownership interest in Skyharbour is approximately 11.4%.

In June 2016, the Company recognized an impairment charge of $2,174,000 in respect of the Moore Lake property, based on the terms of the option agreement. The remaining recoverable amount for the property is estimated to be CAD$1,700,000 and is based on a market-based fair value less costs of disposal assessment of the share and cash consideration to be received by the Company under the terms of the option. While the fair value of the share consideration to be received has been determined from observable inputs, the fair value of the cash consideration has not and, as such, management has classified the fair value determination within Class 2 of the fair value hierarchy.

In August 2016, Denison received 4,500,000 shares of Skyharbour as per the terms of the Moore Lake option agreement and a recovery of $1,242,000 (CAD$1,620,000) was recognized against the carrying value of the property.

In August 2016, the Company increased its interest in the Waterbury Lake property from 61.55% to 63.01% under the terms of the dilution provisions in the agreements governing the project (see note 22).

In September 2016, due to the Company’s current intention to let claims on one of its Canadian properties lapse in the normal course and to not carry out the required exploration programs or make deficiency deposit payments needed to maintain the claims, the Company has recognized impairment charges of $79,000 to reduce the carrying value of the property to $nil. The $nil recoverable amount of the property is based on a market-based fair value less costs of disposal assessment using unobservable inputs and, as such, it is classified within Level 3 of the fair value hierarchy.

Discontinued Operations -Africa Mining Segment-Mali, Namibia and Zambia

On June 10, 2016, Denison completed a transaction with GoviEx to sell all of its mining assets and operations in Africa (see note 5).

13. POST-EMPLOYMENT BENEFITS

The post-employment benefits balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Accrued benefit obligation	$	2,489	$	2,389
	$	2,489	$	2,389

Post-employment benefits liability-by balance sheet presentation:
Current	$	229	$	217
Non-current		2,260		2,172
	$	2,489	$	2,389

The post-employment benefits continuity summary is as follows:

(in thousands)

Balance-December 31, 2015	$	2,389
Benefits paid		(99)
Interest cost		67
Foreign exchange		132
Balance-September 30, 2016	$	2,489

14. RECLAMATION OBLIGATIONS

The reclamation obligations balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Reclamation liability-by location:
Elliot Lake	$	12,279	$	11,610
McClean and Midwest Joint Ventures		8,617		7,834
Other		17		16
	$	20,913	$	19,460

Reclamation and remediation liability-by balance sheet presentation:
Current		659		624
Non-current		20,254		18,836
	$	20,913	$	19,460

The reclamation obligations continuity summary is as follows:

(in thousands)

Balance-December 31, 2015	$	19,460
Accretion		679
Expenditures incurred		(376)
Liability adjustments-balance sheet (note 12)		71
Foreign exchange		1,079
Balance-September 30, 2016	$	20,913

Site Restoration: Elliot Lake

Spending on restoration activities at the Elliot Lake site is funded from monies in the Elliot Lake Reclamation Trust fund (see note 11).

Site Restoration: McClean Lake Joint Venture and Midwest Joint Venture

Under the Mineral Industry Environmental Protection Regulations (1996), the Company is required to provide its pro-rata share of financial assurances to the province of Saskatchewan relating to future decommissioning and reclamation plans that have been filed and approved by the applicable regulatory authorities. As at September 30, 2016, the Company has provided irrevocable standby letters of credit, from a chartered bank, in favour of the Saskatchewan Ministry of Environment, totalling CAD$24,135,000 relating to an approved reclamation plan dated March 2016.

15. DEBT FACILITIES

Line of Credit

The Company’s current credit facility has a maturity date of January 31, 2017 and allows for credit to be extended to the Company for up to CAD$24,000,000. Use of the facility is restricted to non-financial letters of credit in support of reclamation obligations (see note 14).

At September 30, 2016, the Company is in compliance with its facility covenants and CAD$24,000,000 (December 31, 2015: CAD$9,698,000) of the facility is being utilized as collateral for letters of credit issued in respect of the reclamation obligations for the MLJV and MWJV. During the nine months ended September 30, 2016, the Company incurred letter of credit and standby fees of $221,000 and $33,000, respectively.

16. OTHER LIABILITIES

The other liabilities balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Unamortized fair value of toll milling contracts	$	702	$	694
Flow-through share premium obligation (note 17)		1,845		1,821
	$	2,547	$	2,515

Other long-term liabilities-by balance sheet presentation:
Current	$	1,890	$	1,863
Non-current		657		652
	$	2,547	$	2,515

17. SHARE CAPITAL

Denison is authorized to issue an unlimited number of common shares without par value. A continuity summary of the issued and outstanding common shares and the associated dollar amounts is presented below:

	Number of
	Common
(in thousands except share amounts)	Shares

Balance at December 31, 2015	518,438,669	$	1,130,779

Issued for cash:
Share issue proceeds	15,127,805		9,444
Share issue costs	-		(603)
Flow-through share premium liability	-		(1,843)
Share cancellations	(147,481)		-
	14,980,324		6,998
Balance at September 30, 2016	533,418,993	$	1,137,777

New Issues

In May 2016, the Company completed a private placement of 15,127,805 flow-through common shares at a price of CAD$0.82 per share for gross proceeds of $9,444,000 (CAD$12,405,000). The income tax benefits of this issue will be renounced to subscribers no later than December 31, 2016. The related flow-through share premium liability is included as a component of other liabilities on the balance sheet at September 30, 2016 (see note 16).

Share Cancellations

During the nine months ending September 30, 2016, 147,481 shares were cancelled. The cancellations were related to the acquisition of International Enexco Limited (“IEC”) on June 6, 2014. Under the terms of the acquisition, IEC shareholders had two years from the date of acquisition within which to exchange their IEC shares for shares of Denison according to the share exchange ratio established for the deal. On June 6, 2016, this right expired and the un-exchanged shares were subsequently cancelled.

Flow-Through Share Issues

The Company finances a portion of its exploration programs through the use of flow-through share issuances. Canadian income tax deductions relating to these expenditures are claimable by the investors and not by the Company.

As at September 30, 2016, the Company estimates that it has incurred CAD$14,371,000 of its obligation to spend CAD$15,000,000 on eligible exploration expenditures as a result of the issuance of flow-through shares in May 2015. The Company renounced the income tax benefits of this issue in February 2016, with an effective date of renunciation to its subscribers of December 31, 2015. In conjunction with the renunciation, the flow-through share premium liability has been reversed and recognized as part of the deferred tax recovery (see notes 16 and 23).

As at September 30, 2016, the Company has not incurred any expenditures towards its obligation to spend CAD$12,405,000 on eligible exploration expenditures as a result of the issuance of flow-through shares in May 2016.

18. STOCK OPTIONS

A continuity summary of the stock options granted under the Company’s stock-based compensation plan is presented below:

			Weighted-
			Average
			Exercise
	Number of		Price per
	Common		Share
	Shares		(CAD$)

Stock options outstanding - beginning of period	7,074,459	$	1.56
Granted	2,136,250		0.64
Expiries	(1,039,110)		3.32
Forfeitures	(964,695)		1.29
Stock options outstanding - end of period	7,206,904	$	1.07
Stock options exercisable - end of period	4,003,654	$	1.35

A summary of the Company’s stock options outstanding at September 30, 2016 is presented below:

	Weighted			Weighted-
	Average			Average
	Remaining			Exercise
Range of Exercise	Contractual	Number of		Price per
Prices per Share	Life	Common		Share
(CAD$)	(Years)	Shares		(CAD$)

Stock options outstanding
$ 0.50 to $ 0.99	3.89	3,050,655	$	0.64
$ 1.00 to $ 1.19	2.97	1,559,524		1.09
$ 1.20 to $ 1.39	1.47	881,000		1.30
$ 1.40 to $ 1.99	1.46	1,715,725		1.71
Stock options outstanding - end of period	2.82	7,206,904	$	1.07

Options outstanding at September 30, 2016 expire between October 2016 and August 2021.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model. The following table outlines the assumptions used in the model to determine the fair value of options granted:

					Nine Months Ended
					September 30, 2016

Risk-free interest rate					0.57% to 0.69%
Expected stock price volatility					43.07% to 43.98%
Expected life					3.4 to 3.6 years
Expected dividend yield					-
Fair value per share under options granted					CAD$0.21 to CAD$0.22

The fair values of stock options with vesting provisions are amortized on a graded method basis as stock-based compensation expense over the applicable vesting periods. Included in the statement of income (loss) is stock-based compensation of $73,000 and $261,000 for the three and nine months ended September 30, 2016 and $136,000 and $467,000 for the three and nine months ended September 30, 2015. At September 30, 2016, an additional $237,000 in stock-based compensation expense remains to be recognized up until August 2018.

19. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The accumulated other comprehensive income (loss) balance consists of:

		At September 30		At December 31
(in thousands)		2016		2015

Cumulative foreign currency translation	$	(57,232)	$	(73,746)
Unamortized experience gain-post employment liability
Gross		206		206
Tax effect		(56)		(56)
Unrealized gains on investments
Gross		10		4
	$	(57,072)	$	(73,592)

20. SUPPLEMENTAL FINANCIAL INFORMATION

The components of operating expenses from continuing operations are as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Cost of goods and services sold:
Operating overheads:
Mining, other development expense	$	(176)	$	(95)	$	(490)	$	(266)
Milling, conversion expense		(533)		(509)		(1,725)		(979)
Mill feed cost – stockpile depletion		-		-		-		(24)
Less absorption:
-Mineral properties		8		12		29		38
-Concentrates		-		-		-		24
Cost of services		(1,817)		(2,002)		(5,334)		(5,530)
Cost of goods and services sold		(2,518)		(2,594)		(7,520)		(6,737)
Reclamation asset amortization		(35)		(20)		(105)		(62)
Selling expenses		-		(5)		-		(14)
Operating expenses	$	(2,553)	$	(2,619)	$	(7,625)	$	(6,813)

The components of other income (expense) for continuing operations are as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Gains (losses) on:
Disposal of property, plant and equipment	$	-	$	-	$	2	$	-
Disposal of equity investments		(3)		-		(3)		-
Investment fair value through profit (loss)		631		57		1,020		(423)
Other		(109)		7		(252)		(183)
Other income (expense)	$	519	$	64	$	767	$	(606)

The components of finance income (expense) for continuing operations are as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Interest income	$	26	$	30	$	153	$	204
Interest expense		-		(1)		(2)		(1)
Accretion expense-reclamation obligations		(229)		(204)		(679)		(636)
Accretion expense-post-employment benefits		(23)		(23)		(67)		(72)
Finance expense	$	(226)	$	(198)	$	(595)	$	(505)

A summary of depreciation expense recognized in the statement of income (loss) is as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Continuing operations:
Operating expenses
Mining, other development expense	$	(3)	$	(14)	$	(11)	$	(47)
Milling, conversion expense		(533)		(509)		(1,725)		(979)
Cost of services		(68)		(66)		(201)		(193)
Exploration and evaluation		(16)		(26)		(43)		(78)
General and administrative		(9)		(7)		(25)		(18)
Discontinued operations		-		(35)		(26)		(131)
Depreciation expense-gross	$	(629)	$	(657)	$	(2,031)	$	(1,446)

A summary of employee benefits expense recognized in the statement of income (loss) is as follows:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Continuing operations:
Salaries and short-term employee benefits	$	(1,599)	$	(1,546)	$	(4,839)	$	(4,973)
Share-based compensation		(73)		(136)		(261)		(467)
Termination benefits		(4)		(10)		(19)		(17)
Discontinued operations		-		(254)		(269)		(805)
Employee benefits expense	$	(1,676)	$	(1,946)	$	(5,388)	$	(6,262)

The change in non-cash working capital items in the consolidated statements of cash flows is as follows:

		Nine Months Ended
		September 30		September 30
(in thousands)		2016		2015

Change in non-cash working capital items:
Trade and other receivables	$	1,770	$	107
Inventories		(15)		(388)
Prepaid expenses and other assets		197		399
Accounts payable and accrued liabilities		(484)		214
Post-employment benefits		(99)		(120)
Reclamation obligations		(376)		(350)
Change in non-cash working capital items	$	993	$	(138)

21. SEGMENTED INFORMATION

Business Segments

The Company operates in three primary segments – the Mining segment, the Environmental Services segment and the Corporate and Other segment. The Mining segment has historically been further subdivided into geographic regions, being Canada, Africa and Asia, and includes activities related to exploration, evaluation and development, mining, milling (including toll milling) and the sale of mineral concentrates. The Africa and Asia Mining segments were disposed of in 2016 and 2015 respectively and are reported under discontinued operations in the tables below (see note 5). The Environmental Services segment includes the results of the Company’s environmental services business, DES. The Corporate and Other segment includes management fees and commission income earned from UPC and general corporate expenses not allocated to the other segments. Management fees and commission income have been included with general corporate expenses due to the shared infrastructure between the two activities.

For the nine months ended September 30, 2016, reportable segment results were as follows:

(in thousands)	Canada Mining	DES	Corporate and Other	Total Continuing Operations	Total Discontinued Operations

Statement of Operations:
Revenues	3,388	5,974	1,120	10,482	-

Expenses:
Operating expenses	(2,291)	(5,125)	(209)	(7,625)	(64)
Exploration and evaluation	(10,037)	-	-	(10,037)	(74)
General and administrative	(17)	-	(3,270)	(3,287)	(280)
Impairment of mineral properties	(2,253)	-	-	(2,253)	-
	(14,598)	(5,125)	(3,479)	(23,202)	(418)
Segment income (loss)	(11,210)	849	(2,359)	(12,720)	(418)

Revenues – supplemental:
Environmental services	-	5,974	-	5,974	-
Management fees and commissions	-	-	1,120	1,120	-
Toll milling services	3,388	-	-	3,388	-
	3,388	5,974	1,120	10,482	-

Capital additions:
Property, plant and equipment	879	128	-	1,007	78

Long-lived assets:
Plant and equipment
Cost	76,717	3,331	224	80,272	-
Accumulated depreciation	(11,093)	(1,834)	(64)	(12,991)	-
Mineral properties	123,127	-	-	123,127	-
	188,751	1,497	160	190,408	-

For the three months ended September 30, 2016, reportable segment results were as follows:

(in thousands)	Canada Mining	DES	Corporate and Other	Total Continuing Operations	Total Discontinued Operations

Statement of Operations:
Revenues	1,037	2,077	375	3,489	-

Expenses:
Operating expenses	(736)	(1,787)	(30)	(2,553)	-
Exploration and evaluation	(3,308)	-	-	(3,308)	-
General and administrative	-	-	(1,020)	(1,020)	-
Impairment of mineral properties	(79)	-	-	(79)	-
	(4,123)	(1,787)	(1,050)	(6,960)	-
Segment income (loss)	(3,086)	290	(675)	(3,471)	-

Revenues – supplemental:
Environmental services	-	2,077	-	2,077	-
Management fees and commissions	-	-	375	375	-
Toll milling services	1,037	-	-	1,037	-
	1,037	2,077	375	3,489	-

For the nine months ended September 30, 2015, reportable segment results were as follows:

(in thousands)	Canada Mining	DES	Corporate and Other	Total Continuing Operations	Total Discontinued Operations

Statement of Operations:
Revenues	1,904	5,527	1,352	8,783	-

Expenses:
Operating expenses	(1,283)	(5,062)	(468)	(6,813)	(256)
Exploration and evaluation	(12,007)	-	-	(12,007)	(1,058)
General and administrative	(17)	-	(4,575)	(4,592)	(1,211)
	(13,307)	(5,062)	(5,043)	(23,412)	(2,525)
Segment income (loss)	(11,403)	465	(3,691)	(14,629)	(2,525)

Revenues – supplemental:
Environmental services	-	5,527	-	5,527	-
Management fees and commissions	-	-	1,352	1,352	-
Toll milling services	1,904	-	-	1,904	-
	1,904	5.527	1,352	8,783	-

Capital additions:
Property, plant and equipment	982	312	121	1,415	504

Long-lived assets:
Plant and equipment
Cost	72,784	3,274	326	76,384	1,850
Accumulated depreciation	(8,346)	(1,676)	(165)	(10,187)	(1,451)
Mineral properties	126,382	-	-	126,382	34,214
Intangibles	-	-	222	222	-
	190,820	1,598	383	192,801	34,613

For the three months ended September 30, 2015, reportable segment results were as follows:

(in thousands)	Canada Mining	DES	Corporate and Other	Total Continuing Operations	Total Discontinued Operations

Statement of Operations:
Revenues	982	2,113	431	3,526	-

Expenses:
Operating expenses	(617)	(1,858)	(144)	(2,619)	(82)
Exploration and evaluation	(3,753)	-	-	(3,753)	(166)
General and administrative	(1)	-	(1,941)	(1,942)	(524)
	(4,371)	(1,858)	(2,085)	(8,314)	(772)
Segment income (loss)	(3,389)	255	(1,654)	(4,788)	(772)

Revenues – supplemental:
Environmental services	-	2,113	-	2,113	-
Management fees and commissions	-	-	431	431	-
Toll milling services	982	-	-	982	-
	982	2,113	431	3,526	-

22. RELATED PARTY TRANSACTIONS

Uranium Participation Corporation

The management services agreement with UPC expired on March 31, 2016. In March 2016, a new management services agreement was entered into, effective April 1, 2016 for a term of three years. Under the new agreement, Denison will receive the following fees from UPC: a) a base fee of CAD$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 CAD$100 million and up to and including CAD$500 million, and (ii) 0.2% per annum of UPC’s total assets in excess of CAD$500 million; c) a fee, at the discretion of the 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 following transactions were incurred with UPC for the periods noted:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Revenue:
Management fees	$	375	$	431	$	1,120	$	1,330
Commission fees		-		-		-		22
	$	375	$	431	$	1,120	$	1,352

At September 30, 2016, accounts receivable includes $193,000 (December 31, 2015: $157,000) due from UPC with respect to the fees and transactions indicated above.

Korea Electric Power Corporation (“KEPCO”)

As at September 30, 2016, KEPCO holds 58,284,000 shares of Denison representing a share interest of approximately 10.93%. KEPCO is also the majority member of the Korea Waterbury Uranium Limited Partnership (“KWULP”).

In August 2016, Denison funded 100% of the approved fiscal 2016 program spending for the Waterbury Lake project resulting in further dilution of the ownership interest of KWULP in the Waterbury Lake Uranium Limited Partnership (“WLULP”). As a result of the funding, Denison earned an additional 1.46% in the Waterbury Lake project and now holds a 63.01% interest in the WLULP. The acquisition of the additional 1.46% in Waterbury Lake has been accounted for using an effective date of August 31, 2016 and has resulted in Denison recording its increased pro-rata share of the net assets of Waterbury Lake, the majority of which relates to an addition to mineral property assets of $589,000.

Other

During the nine months ended September 30, 2016, the Company incurred investor relations, administrative service fees and other expenses of $125,000 (September 30, 2015: $138,000) with Namdo Management Services Ltd, which shares a common director with Denison. These services were incurred in the normal course of operating a public company. At September 30, 2016, an amount of $nil (December 31, 2015: $nil) was due to this company.

During the nine months ended September 30, 2016, the Company incurred office expenses of $17,000 (September 30, 2015: $nil) with Lundin S.A, a company which provides office and administration services to the executive chairman, other directors and management of Denison. At September 30, 2016, an amount of $nil (December 31, 2015: $nil) was due to this company.

Compensation of Key Management Personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. Key management personnel include the Company’s executive officers, vice-presidents and members of its Board of Directors.

The following compensation was awarded to key management personnel:

		Three Months Ended				Nine Months Ended
		September 30		September 30		September 30		September 30
(in thousands)		2016		2015		2016		2015

Salaries and short-term employee benefits	$	(296)	$	(307)	$	(875)	$	(1,123)
Share-based compensation		(70)		(89)		(195)		(296)
Key management personnel compensation	$	(366)	$	(396)	$	(1,070)	$	(1,419)

23. INCOME TAXES

For the nine months ended September 30, 2016, Denison has recognized deferred tax recoveries of $3,452,000. The deferred tax recovery includes the recognition of previously unrecognized Canadian tax assets of $2,895,000 relating to the February 2016 renunciation of the tax benefits associated with the Company’s CAD$15,000,000 flow-through share issue in May 2015.

24. FAIR VALUE OF FINANCIAL INSTRUMENTS

IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:

●

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

●

Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

●

Level 3 – Inputs that are not based on observable market data.

The fair value of financial instruments which trade in active markets (such as equity instruments) is based on quoted market prices at the balance sheet date. The quoted market price used to value financial assets held by the Company is the current closing price.

Except as otherwise disclosed, the fair values of cash and cash equivalents, trade and other receivables, accounts payable and accrued liabilities, restricted cash and cash equivalents and debt obligations approximate their carrying values as a result of the short-term nature of the instruments, or the variable interest rate associated with the instruments, or the fixed interest rate of the instruments being similar to market rates.

The following table illustrates the classification of the Company’s financial assets within the fair value hierarchy as at September 30, 2016 and December 31, 2015:

				September 30		December 31,
	Financial	Fair		2016		2015
	Instrument	Value		Fair		Fair
(in thousands)	Category(1)	Hierarchy		Value		Value

Financial Assets:
Cash and equivalents	Category D		$	11,829	$	5,367
Trade and other receivables
Trade and other	Category D			3,222		4,826
Receivable-Mongolia Division disposal	Category D			10,000		-
Contingent consideration	Category A	Level 3		-		-
Investments
Debt instruments	Category A	Level 1		-		7,282
Equity instruments-shares	Category A	Level 1		1,607		460
Equity instruments-warrants	Category A	Level 2		2,516		24
Equity instruments-shares	Category B	Level 1		18		12
Restricted cash and equivalents
Elliot Lake reclamation trust fund	Category C			2,353		2,040
Reclamation letter of credit collateral	Category C			103		-
			$	31,648	$	20,011

Financial Liabilities:
Account payable and accrued liabilities	Category E			5,430		4,574
Debt obligations	Category E			-		300
			$	5,430	$	4,874

(1)

Financial instrument designations are as follows: Category A=Financial assets and liabilities at fair value through profit and loss; Category B=Available for sale investments; Category C=Held to maturity investments; Category D=Loans and receivables; and Category E=Financial liabilities at amortized cost.

25. SUBSEQUENT EVENTS

Acquisition of Hook-Carter Mineral Property from ALX Uranium Corp.

On October 13, 2016, Denison announced the execution of a definitive agreement with ALX Uranium Corp (“ALX”) to acquire a majority ownership interest in the Hook-Carter property located in the southwestern margin of the Athabasca Basin in northern Saskatchewan.

Under the terms of the agreement, Denison will issue 7,500,000 common shares in exchange for an immediate 80% interest in the property. ALX will retain a 20% interest in the property and Denison agrees to fund ALX’s share of the first CAD$12,000,000 in expenditures. Denison has also agreed to a work commitment of CAD$3,000,000 over 3 years – should Denison not meet this commitment, Denison’s interest in the property will decrease from 80% to 75% and ALX’s interest will increase from 20% to 25%. The transaction remains subject to and conditional on certain approvals from the applicable securities exchanges.

Using Denison’s closing share price on October 12, 2016 of CAD$0.60 per share, the value of the Denison shares to be issued to acquire the property is estimated to be CAD$4,500,000.

MANAGEMENT’S DISCUSSION & ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2016

TABLE OF CONTENTS
2016 THIRD QUARTER PERFORMANCE HIGHLIGHTS	2
ABOUT DENISON	3
RESULTS OF CONTINUING OPERATIONS	4
Wheeler River Project	7
Exploration Pipeline Properties	12
DISCONTINUED OPERATIONS	15
Sale of African-Based Uranium Interests	15
Sale of Mongolian Mining Division	16
OUTLOOK FOR 2016	20
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	22

MANAGEMENT'S DISCUSSION & ANALYSIS

This Management’s Discussion and Analysis (“MD&A”) of Denison Mines Corp. and its subsidiary companies and joint arrangements (collectively, “Denison” or the “Company”) provides a detailed analysis of the Company’s business and compares its financial results with those of the comparative prior year period. This MD&A is dated as of November 3, 2016, and should be read in conjunction with the Company’s unaudited interim consolidated financial statements and related notes for the three and nine months ended September 30, 2016. The unaudited interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of the interim financial statements including IAS 34, Interim Financial Reporting. Readers are also encouraged to consult the audited consolidated financial statements and MD&A for the year ended December 31, 2015. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

Other continuous disclosure documents, including the Company’s press releases, quarterly and annual reports, Annual Information Form and Form 40-F, are available through the Company’s filings with the securities regulatory authorities in Canada at www.sedar.com ("SEDAR") and the United States at www.sec.gov/edgar.shtml ("EDGAR").

2016 THIRD QUARTER PERFORMANCE HIGHLIGHTS

●

Completed highly successful summer 2016 exploration program at the Wheeler River property

The summer exploration program included 37 drill holes, for a total of 23,622 metres and focused on expanding the uranium mineralization in the vicinity of the Gryphon deposit and completing an initial set of infill and delineation holes. The results demonstrated that the Gryphon deposit is part of a large and robust mineralizing system that remains open in numerous directions. Key highlights include:

Expansion of strike length of Gryphon D Series mineralized lenses

The D Series lenses are located within 200 metres north and northwest of the Gryphon deposit. The lenses currently total 330 meters in collective strike extent, and mineralization remains open along strike in both directions. The most northeastern section drilled to date, Section 5350 GP, was highlighted by the result in drill hole WR-507D2, which returned 9.39% eU3O8 over 1.6 metres, from 579.5 to 581.1 metres, and indicates the continued strength of the mineralizing system and significant potential along strike and down-plunge to the northeast.

Discovery of additional high-grade mineralization associated with the Gryphon A and B Series lenses

Additional high grade mineralization was discovered immediately to the southwestern portion of the Gryphon deposit. Highlights include 2.5% eU3O8 over 4.4 metres from 744.8 to 749.2 metres in drill hole WR-674, and 1.2% eU3O8 over 11.4 metres from 692.7 to 704.1 metres in drill hole WR-602D1. This mineralization is interpreted to be associated with the Gryphon deposit’s previously defined A and B series lenses.

The D Series lenses and the new high grade intersections associated with the A and B Series lenses are not included in the current mineral resource estimate for the Gryphon deposit, nor are they incorporated into the Preliminary Economic Assessment (“PEA”) for the Wheeler River project, as detailed in the Company’s NI 43-101 technical report entitled “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, (the “PEA”) with an effective date of March 31, 2016 - a copy of the report is available on the Company’s website and on both SEDAR and EDGAR.

●

Initiated infill and delineation drilling at the Gryphon deposit

To support the pre-feasibility study (“PFS”) initiated for the Wheeler River project during the second quarter of 2016, Denison commenced an initial infill drilling program at the Gryphon deposit. Infill drilling is required at Gryphon to increase the confidence in the mineral resources estimated from an inferred to an indicated level. During the summer, five drill holes were completed using a directional drilling method to reduce time and costs, and improve drilling accuracy. Highlight results include drill hole WR-668D2, which intersected 1.5% eU3O8 over 14.4 metres (including 2.5% eU3O8 over 7.9 metres and 1.5% eU3O8 over 1.0 metre), and drill hole WR-668, which intersected 0.93% eU3O8 over 14.1 metres (including 2.1% eU3O8 over 3.7 metres and 1.4% eU3O8 over 1.3 metres) and 2.4% eU3O8 over 7.3 metres (including 3.7% eU3O8 over 4.5 metres).

●

Earned $3.4 million in toll milling revenue from McClean Lake during the first nine months of 2016

The McClean Lake mill, in which Denison holds a 22.5% interest, packaged approximately 12.4 million pounds U3O8, during the nine months ended September 30, 2016, for the Cigar Lake Joint Venture (“CLJV”) and generated toll milling revenues for Denison of $3.4 million. The Cigar Lake mine’s annual production for 2016 is expected to be 16 million pounds U3O8, from which Denison is expected to earn approximately $4.5 million in toll milling revenue.

●

Entered into a transaction to acquire the Hook-Carter property from ALX Uranium

In October 2016, Denison executed a definitive agreement with ALX Uranium Corp. (“ALX”) to acquire an immediate 80% ownership of the Hook-Carter property in exchange for the issuance of 7.5 million common shares of Denison. Denison also agreed to fund ALX’s share of the first CAD$12,000,000 in expenditures on the project. The Hook-Carter property consists of 28 claims, totaling 16,805 hectares, and is located to the northeast and on trend of the Triple R deposit, Arrow deposit and Spitfire discovery in the southwestern portion of the Athabasca Basin region, in northern Saskatchewan. Regulatory approvals required for the transaction to proceed have been received, and the parties expect to close the acquisition in early November 2016.

MANAGEMENT'S DISCUSSION & ANALYSIS

ABOUT DENISON

Denison was formed under the laws of Ontario and is a reporting issuer in all Canadian provinces. Denison’s common shares are listed on the Toronto Stock Exchange (the “TSX”) under the symbol “DML” and on the NYSE MKT exchange under the symbol “DNN”.

Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. Including its 60% owned Wheeler River project, which hosts the high grade Phoenix and Gryphon uranium deposits, Denison's exploration portfolio consists of numerous projects covering over 350,000 hectares in the infrastructure rich eastern portion of the Athabasca Basin region. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture (“MLJV”), which includes several uranium deposits and the McClean Lake uranium mill, which is currently processing ore from the Cigar Lake mine under a toll milling agreement, plus a 25.17% interest in the Midwest deposit and a 63.01% interest in the J Zone deposit on the Waterbury Lake property. Both the Midwest and J Zone deposits are located within 20 kilometres of the McClean Lake mill.

Denison is engaged in mine decommissioning and environmental services through its Denison Environmental Services (“DES”) division, which manages Denison’s Elliot Lake reclamation projects and provides post-closure mine and maintenance, as well as environmental consulting services to a variety of industry and government clients.

Denison is also the manager of Uranium Participation Corporation (“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”).

SELECTED QUARTERLY FINANCIAL INFORMATION

(in thousands)	As at September 30, 2016		As at December 31, 2015

Financial Position of Continuing Operations:
Cash and cash equivalents	$	11,829	$	5,367
Debt instruments (GICs)		-		7,282
Cash, cash equivalents and debt instruments	$	11,829	$	12,649

Working capital	$	20,166	$	12,772
Property, plant and equipment	$	190,408	$	188,250
Total assets	$	230,601	$	212,758
Total long-term liabilities	$	38,904	$	38,125

	Three Months Ended				Nine Months Ended
(in thousands, except for per share amounts)	September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015

Results of Continuing Operations:
Total revenues	$	3,489	$	3,526	$	10,482	$	8,783
Net loss	$	(2,506)	$	(3,608)	$	(10,783)	$	(11,443)
Basic and diluted loss per share	$	-	$	(0.01)	$	(0.02)	$	(0.02)

		2016		2016		2016		2015
(in thousands, except for per share amounts)		Q3		Q2		Q1		Q4

Continuing Operations:
Total revenues	$	3,489	$	3,663	$	3,330	$	3,887
Net loss	$	(2,506)	$	(3,832)	$	(4,445)	$	(5,274)
Basic and diluted loss per share	$	-	$	(0.01)	$	(0.01)	$	(0.01)
Discontinued Operations:
Net income (loss)	$	9,050	$	(450)	$	(5,162)	$	(10,926)
Basic and diluted income (loss) per share	$	0.01	$	-	$	(0.01)	$	(0.02)

		2015		2015		2015		2014
(in thousands, except for per share amounts)		Q3		Q2		Q1		Q4

Continuing Operations:
Total revenues	$	3,526	$	2,929	$	2,328	$	2,736
Net loss	$	(3,608)	$	(3,982)	$	(3,853)	$	(4,226)
Basic and diluted loss per share	$	(0.01)	$	(0.01)	$	(0.01)	$	(0.01)
Discontinued Operations:
Net loss	$	(17,824)	$	(152)	$	(5,941)	$	(426)
Basic and diluted loss per share	$	(0.03)	$	-	$	(0.01)	$	-

The majority of the Company’s expenditures are discretionary in nature, and therefore results from operations can vary from period to period. In addition, exploration spending in the Athabasca Basin is subject to seasonality, typically increasing during the winter exploration season (January to mid-April) and again during the summer exploration season (June to mid-October).

MANAGEMENT'S DISCUSSION & ANALYSIS

RESULTS OF CONTINUING OPERATIONS

REVENUES

McClean Lake Uranium Mill

McClean Lake is located on the eastern edge of the Athabasca Basin in northern Saskatchewan, approximately 750 kilometres north of Saskatoon. Denison holds a 22.5% ownership interest in the McClean Lake uranium mill, one of the world’s largest uranium processing facilities, which is currently processing ore from the Cigar Lake mine under a toll milling agreement. The MLJV is a joint venture between AREVA Resources Canada Inc. (“ARC”) with a 70% interest, Denison with a 22.5% interest and OURD (Canada) Co. Ltd. with a 7.5% interest.

The McClean Lake mill is operated by ARC and obtained regulatory authorization from the Canadian Nuclear Safety Commission (“CNSC”), in the second quarter of 2016, to increase its annual production capacity from 13 million pounds U3O8 to 24 million pounds U3O8. The expansion of the McClean Lake mill is in progress and remains fully funded by the CLJV.

During the nine months ended September 30, 2016, the McClean Lake mill packaged approximately 12.4 million pounds U3O8 (September 30, 2015 – 6.7 million pounds U3O8) for the CLJV and the Company’s share of toll milling revenue during the three and nine months ended September 30, 2016 totaled $1,037,000 and $3,388,000, respectively (September 30, 2015 - $982,000 and $1,904,000).

Denison Environmental Services

Revenue from DES during the three and nine months ended September 30, 2016 was $2,077,000 and $5,974,000, respectively (September 30, 2015 - $2,113,000 and $5,527,000). During 2016, DES Canadian dollar revenues increased due to an increase in work activities at client care and maintenance sites, which was partly offset by an unfavourable fluctuation in foreign exchange rates applicable on the translation of revenues earned in Canadian dollars.

Management Services Agreement with UPC

Revenue from the Company’s management contract with UPC was $375,000 and $1,120,000, respectively, during the three and nine months ended September 30, 2016 (September 30, 2015 - $431,000 and $1,352,000). The decrease in revenue was mainly due to a decrease in UPC’s monthly net asset value, which is used to compute the management fee payable to Denison, and an unfavourable fluctuation in foreign exchange rates applicable on the translation of revenues earned in Canadian dollars.

OPERATING EXPENSES

Canada Mining

Operating expenses in the mining segment include depreciation, mining and other development costs, as well as standby costs. Operating expenses during the three and nine months ended September 30, 2016 were $736,000 and $2,291,000, respectively (September 30, 2015 - $617,000 and $1,283,000). During the three and nine months ended September 30, 2016, operating expenses included depreciation from the McClean Lake mill of $533,000 and $1,725,000, respectively (September 30, 2015, $509,000 and $979,000). Depreciation from the McClean Lake mill is primarily associated with the processing of U3O8 for the CLJV and the increase in depreciation in 2016 is directly related to the increase in toll milling production.

MANAGEMENT'S DISCUSSION & ANALYSIS

Environmental Services

Operating expenses during the three and nine months ended September 30, 2016 totaled $1,787,000 and $5,125,000, respectively (September 30, 2015 - $1,858,000 and $5,062,000). The expenses relate primarily to care and maintenance, and environmental consulting services provided to clients and include labour and other costs. During 2016, DES’s Canadian dollar operating expenses increased due to an increase in project activity at certain care and maintenance sites, which was partly offset by a favourable fluctuation in foreign exchange rates applicable on the translation of expenses into US dollars.

CANADIAN MINERAL PROPERTY EXPLORATION & EVALUATION

The Company continued to focus on its significant portfolio of projects in the eastern portion of the Athabasca Basin region in northern Saskatchewan. Denison’s share of exploration and evaluation expenditures was $3,308,000 and $10,037,000, respectively, during the three and nine months ended September 30, 2016 (September 30, 2015 - $3,753,000 and $12,007,000). During 2016, the Company’s exploration and evaluation expenditures decreased as a result of a reduction in winter and summer activities, compared to the prior year, and a favourable fluctuation in foreign exchange rates applicable on the translation of expenses incurred in Canadian dollars. The following table summarizes the activities that were completed in the nine months ending September 30, 2016.

CANADIAN EXPLORATION & EVALUATION ACTIVITIES
Property	Denison’s ownership	Drilling in metres (m)	Other activities
Wheeler River	60%	47,169 (73 holes)	Completion of Preliminary Economic Assessment; Initial PFS activities; Geophysical surveys
Bachman Lake	100%	-	Geophysical surveys
Bell Lake	100%	2,382 (4 holes)	Geophysical surveys
Crawford Lake	100%	2,810 (4 holes)	Geophysical surveys
Hatchet Lake	64.36%(1)	2,040 (6 holes)	Geophysical surveys, Soil Sampling program
Mann Lake	30%	4,775 (7 holes)	-
Marten	50%	1,021 (4 holes)	-
McClean Lake	22.50%	2,850 (7 holes)	-
Murphy Lake	68.85%(1)	3,695 (10 holes)	Geophysical surveys
Moon Lake South	nil(2)	516 (1 hole)	-
Moore Lake	100%(3)	-	Geophysical surveys
South Dufferin	100%	-	Soil Sampling Program
Torwalt Lake	100%	612 (2 holes)	-
Turkey Lake	100%	501 (4 holes)	-
Waterbury Lake	63.01%(4)	3,153 (8 holes)	Geophysical surveys
Wolly	22.5%(1)	5,339 (27 holes)	Geophysical surveys
Total		76,863 (157 holes)

(1)

The Company’s ownership in these projects is as at December 31, 2015. Various partners in these projects have elected to not fund the 2016 programs and dilute their respective ownership interest. As a result, Denison’s interest will increase.

(2)

The Company’s ownership is as at September 30, 2016. Refer to Exploration Pipeline Properties below for further details. The property is currently owned by CanAlaska Uranium Ltd. and Denison is in the process of earning into an initial interest.

(3)

Refer to Exploration Pipeline Properties below for details of option agreement entered into with Skyharbour Resources Ltd.

(4)

The Company earned an additional 1.46% interest in the Waterbury Lake property effective August 31, 2016. Refer to RELATED PARTY TRANSACTIONS below for further details.

MANAGEMENT'S DISCUSSION & ANALYSIS

The Company’s land position in the eastern Athabasca Basin, as of September 30, 2016, is illustrated below. Denison’s high priority exploration properties are outlined in bold.

MANAGEMENT'S DISCUSSION & ANALYSIS

Wheeler River Project

The Wheeler River property is host to the high-grade Phoenix and Gryphon uranium deposits, discovered by Denison in 2008 and 2014 respectively. The Phoenix deposit is estimated to include indicated resources of 70.2 million pounds U3O8 (above a cut-off grade of 0.8% U3O8) based on 166,000 tonnes of mineralization at an average grade of 19.1% U3O8, and is the highest grade undeveloped uranium deposit in the world. The Gryphon deposit is hosted in basement rock, approximately 3 kilometres to the northwest of Phoenix, and is estimated to contain inferred resources of 43.0 million pounds U3O8 (above a cut-off grade of 0.2% U3O8) based on 834,000 tonnes of mineralization at an average grade of 2.3% U3O8.

The Wheeler River property lies between the McArthur River Mine and the Key Lake mill complex in the eastern portion of the Athabasca Basin in northern Saskatchewan – a well-established uranium mining district with infrastructure including the provincial power grid, all-weather provincial highways and haul roads, air transportation infrastructure and multiple uranium processing facilities, including the 22.5% Denison owned McClean Lake mill. The ore haul road and provincial power line between the McArthur River Mine and the Key Lake mill complex run along the eastern side of the Wheeler River property. Denison is the operator of the Wheeler River project and holds a 60% interest, while Cameco Corp. (“Cameco”) holds a 30% interest and JCU (Canada) Exploration Company, Limited (“JCU”) holds a 10% interest. Further details regarding the Wheeler River Project are provided in the PEA. The Wheeler River property location and basement geology map is provided below.

MANAGEMENT'S DISCUSSION & ANALYSIS

Evaluation Program

During the three and nine months ended September 30, 2016, Denison’s share of evaluation costs at Wheeler River amounted to $323,000 and $453,000, respectively (September 30, 2015 - $43,000 and $155,000), and was mainly related to the initiation of PFS activities as well as the internal evaluation, field investigations and engineering studies required to complete the PEA.

■

PEA Results

The PEA resulted in a base case pre-tax Internal Rate of Return (“IRR”) of 20.4%, an indicative post-tax IRR to Denison of 17.8%, and a pre-tax Net Present Value (“NPV”) of CAD$513 million (Denison’s share – CAD$308 million), based on a long term contract price for uranium of $44 per pound U3O8. The PEA also included a production scenario based on a uranium price of $62.60 per pound U3O8, resulting in a pre-tax IRR of 34.1%, an indicative post-tax IRR to Denison of 29.2% and a pre-tax NPV of CAD$1,420 million (Denison’s share – CAD$852 million).

The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources are not mineral reserves and do not have demonstrated economic viability. The PEA, entitled “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada” prepared by SRK Consulting (Canada) Inc., with an effective date of March 31, 2016, is posted on the Company’s website and is available under its profile on SEDAR and EDGAR.

■

PFS Activities

In July 2016, Denison announced the initiation of a PFS for the Wheeler River project. An important step in completing the PFS involves increasing the level of confidence of the previously released inferred resources estimated for the Gryphon deposit to an indicated level. An infill drilling program was designed to achieve this objective by increasing the previous 50 x 50 metre drill spacing to an approximate 25 x 25 metre spacing across the A, B and C series lenses of the Gryphon deposit. The program, which is expected to require approximately 40 drill holes, includes delineation holes designed to potentially close-off areas where mineralization is still open. Refer to the Exploration Programs section below for results of the initial infill and delineation drill holes completed during the summer 2016 program.

Throughout the third quarter of 2016, the Company continued its engineering data collection programs required for the PFS. The programs were carried out in combination with the exploration drilling program and included the following activities:

●

Collecting geotechnical and hydrogeological information from 1,650 metres of exploration drilling at Phoenix;

●

Geotechnical logging of 3,800 metres of historic exploration drill cores from both Phoenix and Gryphon;

●

Geotechnical logging of over 33,000 meters of exploration drill core at Gryphon

●

Completing a total of 92 hydrogeological tests at both Gryphon and Phoenix to better understand groundwater movement and flow paths, including tests in the sandstone at the unconformity and in basement zones across geological structures;

●

Conducting surface water elevation surveys in over 180 boreholes;

●

Collecting 20 sub-surface water samples for laboratory analysis to assist in environmental modelling and water treatment plant design; and

●

Installing two vibrating wire piezometers to facilitate sub-surface hydrogeological data collection during drilling and pumping programs.

In addition to the engineering field work, the Company initiated engineering investigations into alternative mining methods at Phoenix, as well as other options for shaft excavation at Wheeler. The Company has also commenced environmental baseline data collection programs including an aquatic program, terrestrial program, heritage program, waste rock geochemistry analysis, air quality assessments and traditional land-use knowledge. Community consultation programs with local communities have also been initiated by the Company.

MANAGEMENT'S DISCUSSION & ANALYSIS

Exploration Programs

Denison’s share of exploration costs at Wheeler River amounted to $1,736,000 and $4,364,000 during the three and nine months ended September 30, 2016, respectively (September 30, 2015 - $1,786,000 and $4,449,000).

■

Discovery of High-Grade Mineralization Down-Dip and Up-Dip of the A and B Series Lenses

Five drill holes were completed during the summer 2016 exploration drilling program to test for possible extensions of the A and B Series lenses in the shallower, southwestern portion of the Gryphon deposit. The drill targets were located outside of the existing mineralized extent of the current mineral resources estimated for the Gryphon deposit. Four of the holes intersected significant mineralization, indicating a possible extension of certain lenses in both the up-dip and down-dip directions, as provided in the table below and as illustrated in the figure provided under the heading “Gryphon Deposit Infill Drilling Program” below. Further details are provided the Company’s press release dated September 22, 2016.

Mineralized intersections from the A and B Series lens expansion drill holes completed during summer 2016
Section	Drill Hole	From (m)	To (m)	Length (m)(6)	eU3O8 (%)(1)(2)
4900 GP	WR-602D1(3)	692.7	704.1	11.4	1.2
	(including)(5)	693.2	694.2	1.0	3.8
	(including)(5)	699.4	701.1	1.7	4.6
4925 GP	WR-673(4)	627.2	631.0	3.8	0.36
	(including)(5)	627.6	628.6	1.0	1.1
	(and)(3)	634.2	652.9	18.7	0.18
	(including)(4)	642.05	652.85	10.8	0.27
4950 GP	WR-674(3)	691.8	692.8	1.0	0.13
	(and)(3)	740.9	742.2	1.3	0.65
	(and)(3)	744.8	749.2	4.4	2.5
	(including)(5)	745.5	748.9	3.4	3.2
5000 GP	WR-675(5)	607.9	608.9	1.0	1.36
5000 GP	(and)(3)	613.4	614.6	1.2	0.14

(1)

eU3O8 is radiometric equivalent U3O8 from a calibrated total gamma down-hole probe. eU3O8 results are preliminary in nature and all mineralized intervals will be sampled and submitted for chemical U3O8 assay.

(2)

Composites are compiled using 1.0 metre minimum mineralization thickness and 2.0 metres maximum waste.

(3)

Intersection interval is composited above a cut-off grade of 0.05% eU3O8.

(4)

Intersection interval is composited above a cut-off grade of 0.1% eU3O8.

(5)

Intersection interval is composited above a cut-off grade of 1% eU3O8.

(6)

As the drill holes are oriented steeply toward the northwest and the basement mineralization is interpreted to dip moderately to the southeast, the true thickness of the mineralization is expected to be approximately 75% of the intersection lengths.

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Gryphon Deposit Expansion – D Series Lenses

During the winter 2016 drill program a new mineralized zone was discovered within 200 metres north and northwest of the Gryphon deposit. The new zone of mineralization is interpreted to occur as another set of stacked, parallel lenses which are broadly conformable with the Gryphon deposit’s A, B and C Series lenses. The lenses, designated the D series lenses, have not been included in the current mineral resource estimate or the PEA for the Wheeler River project, and form a compelling mineralized zone for potential resource expansion.

Results from 13 of the 17 drill holes completed during the summer 2016 drill program (as announced in the Company’s press release dated September 7, 2016) returned uranium mineralization and demonstrate the continued expansion of the D series lenses along strike. The D Series lens mineralization currently totals 330 meters in collective strike extent, and mineralization remains open along strike in both directions.

MANAGEMENT'S DISCUSSION & ANALYSIS

Highlights from the summer drilling results are provided in the table below.

Highlights of mineralized intersections from exploration drilling on Section 5100 GP and 5350 GP
Section	Drill Hole	From (m)	To (m)	Length (m)(6)	eU3O8 (%)(1)(2)
5100 GP	WR-671	583.5	584.7	1.2	2.26
	WR-671D1	682.2	687.5	5.3	1.21
	WR-671D2	664.2	667.3	3.1	0.68
5350 GP	WR-507D1EXT	721.7	723.5	1.8	1.16
5350 GP	WR-507D2	579.5	581.1	1.6	9.39

(1)

(2)

Intersection interval is composited above a cut-off grade of 0.05% eU3O8. Composites are compiled using 1.0 metre minimum ore thickness and 2.0 metres maximum waste.

(3)

On Section 5350 GP, the most northeastern section drilled to date, results indicate the continued strength of the mineralizing system down-plunge and the significant potential along strike to the northeast where no drilling has been carried out to date. On Section 5100 GP, multiple mineralized intercepts were reported and results indicate continuity between the recently defined D series lenses discovered during winter 2016 and the D series lenses previously identified in 2014.

The following plan map illustrates the northeast plunging Gryphon deposit’s mineralized lenses and highlights the location of the D series lenses interpreted from winter 2016 drilling results (shaded in blue) and the summer 2016 mineralized intercepts (yellow stars). The simplified basement geology at the sub-Athabasca unconformity is provided as the backdrop.

MANAGEMENT'S DISCUSSION & ANALYSIS

■

Discovery of Uranium Mineralization at K-West

During the second quarter of 2016, weak basement-hosted mineralization was discovered in drill hole WR-663 on the K-West conductive trend, which is located approximately 500 metres west of the Gryphon deposit (see Denison's Press Release dated August 4, 2016). This result presents a compelling target for the discovery of a new basement-hosted deposit in close proximity to the Gryphon deposit. Two follow-up drill holes, WR-676 and WR-663D1, were drilled approximately 50 metres up-dip and down-dip of WR-663 respectively. No significant mineralization was intersected in either hole; however, an extensive alteration zone, similar to the result in WR-663, was encountered in both holes and indicates continued potential for the discovery of higher grades. The zone is open along strike within the basement and given the proximity to Gryphon, and similar favorable geological setting, additional follow-up is warranted.

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Gryphon Deposit Infill Drilling Program

A total of five initial infill and delineation drill holes, totaling 2,620 metres, were completed as part of the summer 2016 program. To reduce drilling costs, drill time to mineralization, and to improve drilling accuracy, a directional drilling method was employed during the summer. This approach involves drilling a single parent hole from surface with multiple "daughter holes" drilled from part way down the parent hole. The daughter holes are steered to their respective targets using specialized drilling equipment. The initial infill and delineation drill holes included a single parent hole (WR-668) and subsequent daughter holes (WR-668D1 to WR-668D4). The holes pierced their respective targets within 6 metres or less of the planned location and cost savings were realized owing to the reduced number of drill metres required (a total of 2,620 metres drilled in comparison to 4,247 metres if each hole were drilled from surface). Due to the operational success of the initial set of directional holes, continued infill and delineation drilling was deferred to 2017 to allow for additional exploration holes during the summer 2016 program.

Results from the initial five infill and delineation drill holes, presented in the table below (as announced in the Company’s press release dated October 6, 2016), confirmed high grade results previously reported for the Gryphon deposit and, on initial evaluation, are consistent with A and B series lens interpretations and inferred block model grades for this area of the Gryphon deposit.

Mineralized intersections from infill and delineation drill holes completed during summer 2016
Section	Drill Hole	From (m)	To (m)	Length (m)(5)	eU3O8 (%)(1)(2)	Lens Series Designation
5025 GP	WR-668D1(3)	763.5	768.6	5.1	0.33	A
5025 GP	WR-668D3(3)	738.6	739.6	1.0	0.12	A
5050 GP	WR-668(3)	754.7	768.8	14.1	0.93	A
	(including)(4)	756.1	759.8	3.7	2.1	A
	(including)(4)	765.5	766.8	1.3	1.4	A
	(and)(3)	772.6	779.9	7.3	2.4	B
	(including)(4)	773.8	778.3	4.5	3.7	B
	WR-668D2(3)	768.9	783.3	14.4	1.5	A
	(including)(4)	772.0	779.9	7.9	2.3	A
	(including)(4)	781.7	782.7	1.0	1.5	A
	WR-668D4(3)	795.4	796.4	1.0	0.2	A

(1)

(2)

Composites are compiled using 1.0 metre minimum mineralization thickness and 2.0 metres maximum waste.

(3)

Intersection interval is composited above a cut-off grade of 0.1% eU3O8.

(4)

Intersection interval is composited above a cut-off grade of 1% eU3O8.

(5)

MANAGEMENT'S DISCUSSION & ANALYSIS

The figure below illustrates the Gryphon deposit’s A series lenses on an inclined longitudinal section, and includes results from the initial five infill and delineation drill holes (WR-668 to WR-668D4), as discussed above.

Exploration Pipeline Properties

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Summer 2016 drilling exploration programs

During the third quarter of 2016, the Company managed or participated in four exploration drilling programs (three operated by Denison) on the Company’s exploration pipeline properties. Highlights from the summer programs include the following:

Waterbury Lake

Waterbury Lake is host to the J Zone deposit, located within 20 kilometres of the McClean Lake mill and is a joint venture between Denison (63.01% interest and operator) and the Korea Waterbury Uranium Limited Partnership (“KWULP”) (36.99% interest). The 2016 program at Waterbury Lake is being fully funded by Denison at the cost of dilution to the KWULP. Denison incurred exploration costs during the three and nine months ended September 30, 2016 of $222,000 and $926,000, respectively (September 30, 2015 - $317,000 and $685,000).

Work during the third quarter of 2016 focused on the Hamilton Lake target area, which is located on the western side of the property. The Hamilton Lake area is a relatively large and underexplored 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 by Cameco, at Hamilton Lake, intersected graphitic metasediments, structure, alteration, and elevated sandstone geochemistry.

MANAGEMENT'S DISCUSSION & ANALYSIS

During the second quarter of 2016, a large DCIP resistivity survey was completed over the southern portion of the Hamilton Lake area (Grid WAT-16-G2) – comprising 21 lines and totaling 115.2 line kilometres. Results 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.

During the third quarter of 2016, a two-hole drill program was completed, for a total of 1,077 metres, in order to test one of the sandstone breach anomalies overlying a strong basement resistivity low on line L36+00E. Drill hole WAT16-432A intersected a significant illite/chlorite altered fault zone in the basement within north-south striking, steeply east dipping, graphite-rich pelitic gneisses. WAT16-433, which was drilled 75 metres west of WAT16-432A, intersected a 30 metre wide fault zone in the sandstone, approximately 85 metres above the unconformity (at 426 metres), with associated intense bleaching, desilicification and illite clay replacement. WAT16-433 averaged 8.3 ppm uranium over the basal 24.8 metres of sandstone. Spot samples taken immediately above the unconformity, in WAT16-433, from 421.5 to 422.0 metres and from 422.0 to 422.5 metres, returned uranium values of 389 ppm and 299 ppm respectively. A 20 meter reverse unconformity offset can be interpreted between the two holes, which constitutes a priority target for follow up on section and along strike.

Based on the WAT16-G2 resistivity survey, the Hamilton Lake north–south trending resistivity low associated with the graphitic fault structure intersected in WAT16-432A and WAT16-433 has a minimum strike length of 4.5 kilometres to the south of the current drilling. Furthermore, based on airborne magnetic data, this trend appears to continue for a further 9 kilometres to the north. No drilling has been conducted along this trend outside of the current drilling and, given the highly encouraging summer 2016 exploration results, this trend warrants further exploration.

The uranium grade results reported above are from geochemical analysis performed on drill core samples by the Saskatchewan Research Council ("SRC"), an accredited geo-analytical laboratory, using a nitric-hydrochloric partial digest followed by ICP-MS analysis.

Crawford Lake

During the third quarter of 2016, two drill holes were completed for a total of 1,706 metres on the Company’s 100% owned Crawford Lake property. Both drill holes targeted the CR-3 conductive trend. Crawford Lake is located just west of Wheeler River, approximately 10 kilometres south of Cameco’s Millennium deposit, in the southeast portion of the Athabasca Basin. Exploration costs during the three and nine months ended September 30, 2016 were $326,000 and $755,000, respectively (September 30, 2015 - $599,000 and $1,892,000).

The first hole completed (CR-16-27A) was designed to follow up 600 metres along strike to the southwest of weak uranium mineralization intersected at the unconformity in drill hole MS-16-01 on CanAlaska’s Moon Lake property (refer to the Moon Lake South section below). 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) targeted a previously untested parallel conductor to the main CR-3 trend. Drill hole 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. Geochemical and spectral clay results are pending. The CR-3 trend remains highly prospective with the previous discovery of weak uranium mineralization and both strong sandstone and basement alteration present. Future programs will continue to focus in this area.

Hatchet Lake

The Hatchet Lake Project is a joint venture between Denison (64.36% interest as at December 31, 2015 and operator) and Eros Resources Corp (“Eros”) (35.64% interest as at December 31, 2015), and is located 16 kilometers north of the McClean Lake mill. The 2016 program at Hatchet Lake is being fully funded by Denison at the cost of dilution to Eros. Denison incurred exploration costs during the three and nine months ended September 30, 2016 of $575,000 and $748,000, respectively (September 30, 2015 - $21,000 and $622,000).

The drilling program carried out during the third quarter of 2016 consisted of 2,040 metres of drilling in six holes. At the Tuning Fork target area, drill hole TF-16-10 was completed approximately 100 metres east of previous drill holes HL-10-01 and TF-15-01, which intersected intense basement alteration and anomalous concentrations of uranium and other pathfinder elements. Drill hole TF-16-10, designed to test the interpreted plunge extension of the mineralized alteration system, intersected a strongly graphitic, locally faulted pelitic gneisses in the basement, however failed to intersect favorable alteration or elevated radioactivity. At the Hatchet South target area, five widely-spaced drill holes were completed to test targets identified from the 2015 and 2016 small moving loop electromagnetic (SMLTEM) surveys. Drill hole HTS-16-01 intersected a favorable geologic setting with graphitic pelitic gneisses overlying granitic gneiss in the basement, though no associated alteration or structure was encountered. Drill hole HTS-16-02 intersected granite and fresh sillimanite-bearing pelitic gneisses in the basement, and thus did not explain the electromagnetic target. Drill holes HTS-16-03 and HTS-16-04 both intersected narrow, weakly graphitic, locally sheared and faulted graphitic horizons in the basement. Neither hole encountered significant alteration or radioactivity associated with these zones. The last hole of the program, HTS-16-05, encountered significant structure and alteration in the basal 60 metres of the sandstone column, but did not explain the electromagnetic conductor. Drill hole HTS-16-05 was interpreted to have overshot the electromagnetic target. Geochemical and spectral clay results have been received and are currently undergoing interpretation.

MANAGEMENT'S DISCUSSION & ANALYSIS

Further to the drilling program, a land-based radon and soil sampling program was completed over the southeastern extension of the Richardson Lake Trend. This portion of the trend, which occurs outside of the Athabasca basin and overlies basement rocks, is largely unexplored but occurs along strike of historical uranium, base metal and gold drill intersections obtained on the northwestern half of the Richardson Lake Trend. The main objective of the survey was to identify zones of elevated radon and soil geochemical concentrations potentially related to an underlying bedrock source to assist with target generation for future drilling programs in the area. The preliminary results from the radon survey highlight several areas with high radon flux that show good correlation with known electromagnetic conductors in the area. Further review of the radon data, in conjunction with the results from the soil survey, should be completed to confirm or refine these areas of interest. The results from the soil sampling program have been received and are currently undergoing interpretation.

McClean Lake

The McClean Lake project is owned by Denison (22.50% interest) and its joint venture partners, OURD (7.50% interest) and AREVA Resources Canada as the operator (70.00% interest). Denison’s share of exploration costs during the three and nine months ended September 30, 2016 were $87,000 and $99,000, respectively (September 30, 2015 - $2,000 and $5,000).

During the third quarter of 2016, seven drill holes were completed for a total of 2,850 metres, including two re-starts. The objective of the program was to test for basement-hosted mineralization occurring down-dip or down-plunge of the previously mined Sue deposits. Localized weak basement mineralization was intersected in drill holes S-835 and S-836, south and southwest of the Sue B open-pit, respectively. Highlight results include hand-held scintillometer probe peaks of 4,558 cps at 364.8 m in drill hole S-835 and 24,052 cps at 186.2 m in drill hole S-836. The other five holes did not intersect any significant mineralization.

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Other exploration pipeline properties

During 2016, the Company entered into option agreements on the following properties:

Moon Lake South

In January 2016, the Company entered into an option agreement with CanAlaska Uranium Ltd. (“CanAlaska”) to earn an interest in CanAlaska’s 100% owned Moon Lake South project, located adjacent to Denison’s 100% owned Crawford Lake property. Under the terms of the option, Denison can earn an initial 51% interest in the project by incurring CAD$200,000 in exploration expenditures by December 31, 2017 and can increase its interest to 75% by incurring an additional CAD$500,000 in exploration expenditures by December 31, 2020. As at September 30, 2016, Denison had incurred CAD$129,000 in exploration expenditures on the property.

Moore Lake

On July 14, 2016, the Company entered into 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. Denison received 4,500,000 common shares of Skyharbour and, under the terms of the agreement, expects to receive staged cash payments of CAD$500,000, in aggregate, over the next five years. Skyharbour must also spend CAD$3,500,000 in exploration expenditures on the property, over the same five year period, in order to complete the option.

Denison has also retained 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%. As at September 30, 2016, Denison has an approximate 11.4% ownership interest in Skyharbour.

MANAGEMENT'S DISCUSSION & ANALYSIS

GENERAL AND ADMINISTRATIVE EXPENSES

Total general and administrative expenses were $1,020,000 and $3,287,000 during the three and nine months ended September 30, 2016, respectively (September 30, 2015 - $1,942,000 and $4,592,000). These costs are mainly comprised of head office salaries and benefits, office costs, audit and regulatory costs, legal fees, investor relations expenses, project costs and all other costs related to operating a public company with listings in Canada and the United States. The decrease in general and administrative expenses during 2016, compared to the prior year, was primarily a result of a decrease in project costs and a favourable fluctuation in foreign exchange rates applicable on the translation of Canadian dollar expenses. Project costs in 2015 were mainly related to the arrangement agreement that the Company entered into with Fission Uranium Corp in July 2015 and subsequently terminated in October 2015.

IMPAIRMENT – MINERAL PROPERTIES

Due to the Company’s current intention to let certain claims lapse on one of its Canadian properties, the Company recognized an impairment charge of $79,000, during the three months ended September 30, 2016, to reduce the recoverable amount of the property to $nil.

During the nine months ended September 30, 2016, the Company recognized impairment charges of $2,253,000, which included an impairment charge of $2,174,000 against the value of its Moore Lake property. The impairment of the Moore Lake property was based on the terms of the transaction between the Company and Skyharbour (refer to Exploration Pipeline Properties section above for details). The remaining recoverable amount for the Moore Lake property, estimated to be of CAD$1,700,000, is based on a market-based fair value less costs of disposal assessment of the share and cash consideration to be received by the Company under the terms of the transaction.

No impairments were recognized during the nine months ended September 30, 2015.

FOREIGN EXCHANGE INCOME AND EXPENSE

During the three and nine months ended September 30, 2016, foreign exchange income of $481,000 and foreign exchange losses of $1,687,000 were recognized, respectively (September 30, 2015 – foreign exchange income of $758,000 and $909,000). The increase in the foreign exchange income during the three months ended September 30, 2016 is due primarily to favourable fluctuations in foreign exchange rates applicable on the translation of US dollar denominated intercompany debt. The decrease in the foreign exchange income, during the nine months ended September 30, 2016, is due primarily to unfavourable fluctuations in foreign exchange rates applicable on the translation of US dollar intercompany debt.

DISCONTINUED OPERATIONS

Sale of African-Based Uranium Interests

In June 2016, GoviEx Uranium Inc. (“GoviEx”) and Denison combined their respective African uranium mineral interests pursuant to a transaction in which GoviEx acquired Denison’s wholly owned subsidiary, Rockgate Capital Corp., which held all of Denison’s Africa-based uranium interests, in exchange for 56,050,450 common shares and 22,420,180 common share purchase warrants of GoviEx.

In addition, GoviEx undertook a concurrent equity financing by means of a non-brokered private placement, in which Denison provided the lead order for the private placement of $500,000 in exchange for 9,093,571 common shares and 9,093,571 common share purchase warrants.

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 ownership interest in GoviEx was approximately 24.6% as at September 30, 2016. GoviEx is a publicly traded company and recently listed on the TSX Venture Exchange under the symbol “GXU”.

Loss on sale of African-Based Uranium Interests

Upon the sale of the Company’s African interests to GoviEx, in June 2016, the Company recognized a loss on disposal of the Africa mining division of $70,000.

MANAGEMENT'S DISCUSSION & ANALYSIS

Operating Expenses

Operating expenses in Africa during the three and nine months ended September 30, 2016 totaled $nil and $64,000, respectively (September 30, 2015 - $79,000 and $241,000).

Exploration Expenditures

Exploration expenses in Africa during the three and nine months ended September 30, 2016 were $nil and $74,000, respectively (September 30, 2015 - $153,000 and $677,000).

General and Administrative Expenses

During the three and nine months ended September 30, 2016, general and administrative expenses totaled $nil and $280,000, respectively (September 30, 2015 - $136,000 and $504,000).

Foreign Exchange Income and Expense

During the three and nine months ended September 30, 2016, foreign exchange losses of $nil and $5,154,000, respectively, were recognized (September 30, 2015 – $18,012,000 and $24,321,000).

Sale of Mongolian Mining Division

In December 2015, Denison announced the closing of the sale of its interest in the Gurvan Saihan Joint Venture (“GSJV”) to Uranium Industry a.s. (“Uranium Industry”), of the Czech Republic, pursuant to an amended and restated share purchase agreement entered into on November 25, 2015 (the “GSJV Agreement”). Under the terms of the GSJV Agreement, Denison received $1.25 million in initial payments during 2015, prior to the closing of the sale, and has the right to receive additional contingent proceeds of up to $12.0 million, for total consideration of $13.25 million.

On July 22, 2016, the Mineral Resources Authority of Mongolia (“MRAM”) issued letters to the GSJV notifying it of its intention to grant mining licenses to the GSJV for the Hairhan, Haraat, Gurvan Saihan and Ulzit projects. On September 20, 2016, the mining license certificates for all four projects were formally issued.

The fair value of the receivable for contingent consideration related to the issuance of mining licenses has been increased from $nil, at December 31, 2015, to $10,000,000, as at September 30, 2016, in conjunction with the formal issue of mining licenses. A corresponding increase in the gain on the disposal has also been recognized. The contingent consideration related to the achievement of certain production thresholds continues to be fair valued at $nil and will be re-measured at each subsequent reporting date.

During the three and nine months ended September 30, 2016, a gain on disposal of $9,050,000 was recognized based on the increase in the fair value of the contingent receivable of $10,000,000, net of accruals for additional transaction costs.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $11,829,000 at September 30, 2016, compared with $5,367,000 at December 31, 2015. At September 30, 2016, the company held no debt instruments, while at December 31, 2015, the company held $7,282,000 in debt instruments (GIC’s).

The increase in cash and cash equivalents, including the impact of foreign exchange, of $6,462,000 was due to net cash used in operating activities of $7,523,000, offset by a net foreign exchange gain of $278,000 on the translation of currency balances at period end, net cash provided by investing activities of $5,179,000, and net cash provided by financing activities of $8,528,000.

Net cash used in operating activities of $7,523,000, during the nine months ended September 30, 2016, is comprised of a net loss for the period that was offset by adjustments for non-cash items and an increase in the change in working capital items.

MANAGEMENT'S DISCUSSION & ANALYSIS

Net cash provided by investing activities of $5,179,000, was mainly due to the maturity of debt instruments totaling $7,785,000, partly offset by expenditures on property, plant and equipment of $1,083,000, cash used in the divestiture of the Denison’s African assets of $798,000, the purchase of $500,000 in GoviEx common shares and warrants, and an increase of $280,000 in restricted cash and investments primary due to funding of the Elliot Lake reclamation trust fund.

Net cash provided by financing activities of $8,528,000 largely reflects net proceeds received on the issuance of flow-through common shares of $8,841,000, net of issue costs. The proceeds will be used to fund the Company’s Canadian exploration programs through to the end of 2017. As at September 30, 2016, the company has not incurred any expenditures towards the spending obligation associated with the May 2016 financing.

As at September 30, 2016, the Company has spent CAD$14,371,000 toward its obligation to spend CAD$15 million on eligible Canadian exploration expenses under the flow-through share financing completed in May 2015. The remaining balance of CAD$629,000 is expected to be spent by December 31, 2016.

The Company holds the large majority of its cash, cash equivalents, and investments in Canadian dollars. As at September 30, 2016, the Company’s cash, cash equivalents and current investments amount to CAD$15.5 million.

Revolving Term Credit Facility

On January 27, 2016, the Company entered into an agreement with the Bank of Nova Scotia to amend the terms of a revolving term credit facility entered into in 2015 and to extend the maturity date to January 31, 2017 (“2016 Credit Facility”). Under the amended agreement, the Company has access to letters of credit of up to CAD$24,000,000. Use of the facility remains restricted to non-financial letters of credit in support of reclamation obligations.

The agreement contains a covenant to maintain a level of tangible net worth greater than or equal to the sum of $150,000,000 and a covenant to maintain a minimum balance of cash and cash equivalents of CAD$5,000,000 on deposit with the Bank of Nova Scotia. As security for the amended facility, Denison has provided an unlimited full recourse guarantee and a pledge of all of the shares of Denison Mines Inc. (“DMI”). DMI has provided a first-priority security interest in all present and future personal property and an assignment of its rights and interests under all material agreements relative to the McClean Lake and Midwest projects. The 2016 Credit Facility is subject to letter of credit and standby fees of 2.40% and 0.75%, respectively.

Going Concern Assumption

At September 30, 2016, the Company had sufficient liquidity on hand to fund its planned operations for the fiscal 2016 year. However, in the absence of additional funding, the Company anticipates that in 2017 it will become non-compliant with the minimum cash covenant requirement of its 2016 Credit Facility, which casts substantial doubt upon the Company’s ability to realize its assets and discharge its liabilities in the normal course of business, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. In order to both fund operations and maintain rights under existing agreements, the Company must secure sufficient future funding. The Company is actively pursuing access to different sources of funding and while it has been successful in the past in obtaining financing for its activities, there is no assurance that it will be able to obtain adequate financing in the future.

Reclamation Sites

Elliot Lake – Spending on restoration activities at the Elliot Lake sites is funded from monies in the Elliot Lake reclamation trust fund. At September 30, 2016, the amount of restricted cash and investments relating to the Elliot Lake reclamation trust fund was $2,353,000.

McClean Lake and Midwest – Under the Mineral Industry Environmental Protection Regulations, 1996, the Company is required to provide its pro-rata share of financial assurances to the province of Saskatchewan. In March 2016, the Company received a letter of acceptance from the applicable regulatory authorities that the updated plan submitted in January 2016 was approved. Under the approved plan, the Company increased its financial assurance to CAD$24,135,000. The financial assurance provided requires the Company to fully utilize its 2016 Credit Facility and commit CAD$135,000 with the Bank of Nova Scotia as restricted cash collateral.

MANAGEMENT'S DISCUSSION & ANALYSIS

TRANSACTIONS WITH RELATED PARTIES

Uranium Participation Corporation

The Company is a party to a management services agreement with UPC, which was entered into for a three year term effective April 1, 2016 (“UPC Agreement”). Under the UPC Agreement, Denison will receive the following fees from UPC: a) a base fee of CAD$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 CAD$100,000,000 and up to and including CAD$500,000,000, and (ii) 0.2% per annum of UPC’s total assets in excess of CAD$500,000,000; c) a fee, at the discretion of the 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 following fees were received from UPC for the periods noted:

		Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
(in thousands)		2016		2015		2016		2015

Revenue
Management fees	$	375	$	431	$	1,120	$	1,330
Commissions		-		-		-		22
	$	375	$	431	$	1,120	$	1,352

At September 30, 2016, accounts receivable includes $193,000 (December 31, 2015: $157,000) due from UPC with respect to the fees and transactions discussed above.

Korea Electric Power Corporation (“KEPCO”)

In 2009, Denison entered into a strategic relationship agreement with its largest shareholder, KEPCO. Pursuant to the strategic relationship agreement, KEPCO is entitled to subscribe for additional common shares in Denison’s future share offerings. The strategic relationship agreement also provides KEPCO with a right of first opportunity if Denison intends to sell any of its substantial assets, a right to participate in certain purchases of substantial assets which Denison proposes to acquire and a right to nominate one director to Denison’s Board, so long as its share interest in Denison is above 5.0%. As at September 30, 2016, KEPCO holds 58,284,000 shares of Denison representing a share interest of 10.93%.

KEPCO is also the primary holder of KWULP, which holds an interest along with Denison in the WLULP, an entity whose key asset is the Waterbury Lake property. When a spending program is approved on the Waterbury Lake property, each partner in the WLULP is required to fund the partnership based upon its respective ownership interest. Spending program approval ordinarily requires 75% of the voting interest.

In January 2014, Denison agreed to allow KWULP to defer its funding obligations to WLULP until September 30, 2015, such that KWULP would not be immediately diluted as per the dilution provisions in the relevant agreements. In exchange for the deferral, Denison was permitted to authorize spending programs to September 30, 2016, without having to obtain the approval of 75% of the voting interest.

On September 30, 2015, KWULP notified Denison that it had elected to dilute its interest in the partnership, rather than to fund its deferred obligations associated with the project expenditures incurred in 2014 and 2015, and to further dilute in 2016 based on the project expenditures incurred up to September 30, 2016.

As a result of funding 100% of the approved fiscal 2016 program spending for the Waterbury Lake project, in August 2016, Denison earned an additional 1.46% in the Waterbury Lake project and now holds a 63.01% interest in the WLULP. The acquisition of the additional 1.46% in Waterbury Lake has been accounted for using an effective date of August 31, 2016 and has resulted in Denison recording its increased pro-rata share of the net assets of the WLULP, the majority of which relates to an addition to mineral property assets of $589,000.

MANAGEMENT'S DISCUSSION & ANALYSIS

Other

The Company is involved in certain other related party transactions. All services and transactions with these related parties were made on terms equivalent to those that prevail in arm’s length transactions.

■

Investor relations, administrative service fees and other expenses of $59,000 and $125,000 were incurred during the three and nine months ended September 30, 2016 (September 30, 2015: $76,000 and $138,000) with Namdo Management Services Ltd, which shares a common director with Denison. These services were incurred in the normal course of operating a public company.

■

Office expenses of $5,000 and $17,000 were incurred during the three and nine months ended September 30, 2016 with Lundin S.A., which provides office and administrative services to the executive chairman, other directors and management of Denison. Denison did not incur similar fees from this company during 2015.

COMPENSATION OF KEY MANAGEMENT PERSONNEL

The following compensation was awarded to key management personnel:

		Three Months Ended				Nine Months Ended
		September 30,		September 30,		September 30,		September 30,
(in thousands)		2016		2015		2016		2015

Salaries and short-term employee benefits	$	296	$	307	$	875	$	1,123
Share-based compensation		70		89		195		296
	$	366	$	396	$	1,070	$	1,419

SUBSEQUENT EVENT

Transaction to Acquire the Hook-Carter Property from ALX

In October 2016, Denison entered into a transaction to acquire an immediate 80% ownership interest in the Hook-Carter property in exchange for the issuance of 7.5 million Denison common shares to ALX. The property consists of 28 claims, totaling 16,805 hectares, and is located near the southwestern portion of the Athabasca Basin in northern Saskatchewan. The property is highlighted by 15 kilometres of strike potential along the prolific Patterson Lake Corridor and features between 250 and 700 metres of Athabasca Group sandstone cover overlying the basement rocks that define the prospective geological trends or corridors. The property is significantly underexplored, with only eight drill holes completed to date, including only five drill holes on the Patterson Lake Corridor. Results from historic holes show significant sandstone alteration, encouraging sandstone geochemistry and favourable basement geology in terms of lithology and structure. All the holes drilled to date were designed to test the unconformity and therefore the basement is considered unexplored.

Under the terms of the agreement, ALX will retain a 20% interest in the property and Denison agrees to fund ALX’s share of the first CAD$12,000,000 in expenditures on the property. 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 the property, subject to a modest work commitment that involves spending CAD$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 will decrease from 80% to 75%. Thirty-six months after the effective date of the agreement, the parties agree to form a joint venture, in which all material decisions shall be carried by a vote representing a 51% ownership interest. The Denison common shares to be issued to ALX will be subject to an escrow arrangement, whereby 1/6th of the shares will be available to ALX on closing, and a further 1/6th of the shares will be released from escrow in 6 month increments following the closing. Completion of the transaction was conditional in part upon receipt of required regulatory and/or exchange approvals, which have been received, and closing is expected to occur in early November.

MANAGEMENT'S DISCUSSION & ANALYSIS

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

OUTSTANDING SHARE DATA

At November 3, 2016, there were [533,418,993] common shares issued and outstanding, and stock options outstanding for [7,206,904] Denison common shares, for a total of [540,625,897] common shares on a fully-diluted basis.

CONTROLS AND PROCEDURES

The Company’s management is responsible for establishing and maintaining an adequate system of internal control over financial reporting. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

There has not been any change in the Company’s internal control over financial reporting that occurred during the three and nine months ended September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

OUTLOOK FOR 2016

At the end of the second quarter of 2016, the Company modified its budget for the year and issued an updated outlook (“Previous Outlook 2016”). The modifications in the second quarter reflected a reduction in planned expenditures for exploration and evaluation in Canada as well as the sale of the Company’s assets in Africa to GoviEx. The Company’s outlook has been further modified (the “Current Outlook”), at the end of the third quarter of 2016, to reflect actual results as at September 30, 2016, and to incorporate updated revenue and spending estimates for the remainder of the year.

(in thousands)	PREVIOUS OUTLOOK 2016	CURRENT OUTLOOK 2016	Actual to September 30, 2016 (2)
Canada (1)
Toll Milling Revenue & Mineral Sales	$ 4,540	$ 4,540	$ 3,357
Development & Operations	(2,400)	(1,810)	(1,189)
Mineral Property Exploration & Evaluation	(12,000)	(12,000)	(10,598)
	(9,860)	(9,270)	(8,430)
Africa
Zambia, Mali and Namibia	(520)	(520)	(520)
	(520)	(520)	(520)
Other (1)
UPC Management Services	1,530	1,300	1,019
DES Environmental Services	920	1,130	922
Corporate Administration & Other	(4,250)	(4,420)	(3,392)
	(1,800)	(1,990)	(1,451)

Total	$ (12,180)	$ (11,780)	$ (10,401)

(1)

Outlook figures have been converted using various period average US$ to CAD$ exchange rates ranging from of 1.29 to 1.37.

(2)

The Company budgets on a cash basis. As a result, actual amounts represent a non-GAAP measure and exclude non-cash depreciation and amortization amounts of $2,244,000.

MANAGEMENT'S DISCUSSION & ANALYSIS

CANADA

Toll Milling Revenue & Mineral Sales

The McClean Lake mill is operated by ARC and has obtained regulatory authorization from the CNSC to increase its annual production capacity from 13 million pounds U3O8 to 24 million pounds U3O8. The McClean Lake mill is expected to produce 16 million pounds U3O8 during 2016 and production is expected to be 100% from Cigar Lake ore. Denison's share of revenue from toll milling of the Cigar Lake ore is forecasted to be $4.5 million.

The sale of approximately 25,000 pounds U3O8 currently held by Denison in inventory and has been deferred until market conditions improve.

Development & Operations

Development and operations expenditures are mainly comprised of operating and capital expenditures at McClean Lake and Midwest, plus reclamation expenditures at Elliot Lake. In 2016, Denison's share of operating and capital expenditures at McClean Lake and Midwest were budgeted to be $1.6 million (CAD$2.1 million) and are now forecasted to be $1.1 million (CAD$1.4 million), due to better than expected costs and the deferral of certain projects. Operating expenditures in respect of Denison's share of the Surface Access Borehole Resource Extraction ("SABRE") program, were budgeted to be $797,000 (CAD$1.04 million) and are now forecasted to be $531,000 (CAD$698,000). The SABRE program is operated by ARC, as part of the McClean Lake joint venture. The 2016 SABRE program is expected to study the economic and technical potential associated with further design and process improvements targeted at increasing the rate of mine production.

Reclamation expenditures at Elliot Lake were budgeted to be $665,000 (CAD$864,000) and are now forecasted to be $571,000 (CAD$752,000), due to the deferral of various capital and one-time project costs to 2017.

Mineral Property Exploration & Evaluation

The 2016 outlook for the Canadian exploration program, inclusive of the evaluation work planned for Wheeler River, was updated, at the end of the second quarter, to reflect a reduction in winter exploration activities that occurred during the first half of the year. Denison’s share of expenditures is forecasted to be $12 million. Denison’s exploration expenditures are largely being funded by the proceeds from the Company’s flow-through share offering completed in May 2015, which raised CAD$15 million. The Company remains on track to meet its exploration spending obligations under the May 2015 offering by the end of 2016.

Wheeler River - Evaluation

In April 2016, the Company announced the results of the PEA studying the economic potential of co-developing the Gryphon and Phoenix deposits. As a result of the positive economics in the PEA, the Company commenced work on a PFS, including environmental assessment work, with an approximate forecast for 2016 of CAD$1.8 million (Denison's share, CAD$1.1 million). The budget for PFS work expected to be completed in 2016 was reduced, at the end of the second quarter, to reflect the updated timing of certain PFS activities, which are now expected to be completed in 2017.

Wheeler River - Exploration

The total exploration budget for Wheeler River in 2016 is CAD$10.0 million (Denison's share, CAD$6.0 million). The winter drilling program was completed in April 2016 and the summer drilling program was completed in October 2016.

Drilling results to date demonstrate that the Gryphon deposit remains open in numerous directions and additional exploration drilling is warranted in 2017 to test the extents of the mineralization with the objective of expanding the current mineral resources estimated for the deposit. The D Series lenses, which currently have a collective strike extent of 330 meters, remain open along strike to the northeast and to the southwest and additional drilling is warranted. In addition, the significant mineralized intercepts reported both up-dip and down-dip of the current extent of the A and B Series lenses, on the shallower southwestern portion of the deposit, highlight the potential for resource expansion with additional drilling. Furthermore, the deposit is not considered closed-off on the deeper, down-dip and down-plunge portions of the A and B Series lenses. The weaker uranium intercepts along these margins of the deposit do not necessarily indicate closure as basement-hosted uranium deposits are known for variable grade continuity. The weak mineralization and significant alteration intersected in these areas suggest potential for additional high-grade shoots or lenses outside of the current mineral resource estimate.

Infill drilling of the Gryphon deposit is expected to continue in 2017 to support the completion of the PFS. An estimated 40 infill drill holes are required to upgrade the confidence of the current mineral resource estimate from the inferred to indicated mineral resource category. During the summer 2016 program, five infill holes were completed and the exploration team gained valuable experience, in advance of the 2017 drilling season, with a new directional drilling method under local bedrock conditions. With the enlarged mineralized footprint around the Gryphon deposit, based on the 2016 exploration results, the infill drilling program in 2017 may be expanded to allow for a larger portion of the potential resources at or around Gryphon to be categorized as indicated and incorporated into the PFS.

MANAGEMENT'S DISCUSSION & ANALYSIS

UPC Management and DES Environmental Services

Net management fees from UPC, expected to be earned during 2016, have been decreased to $1.3 million (CAD$1.7 million), due to a decline in the uranium spot price during the year, which is used to compute the management fee payable to Denison.

Revenue from operations at DES during 2016 is now forecasted to be $7.6 million (CAD$10.1 million) and operating and overhead expenses are now forecasted to be $6.3 million (CAD$8.3 million). The increase in forecasted operating revenue and expenses is due to better than expected operating performance associated with work activities at client care and maintenance sites. Capital expenditures at DES are budgeted to be $230,000 (CAD$300,000).

Corporate Administration and Other

Corporate administration and other expenditures are comprised of corporate administration expenses and letter of credit and standby fees. Corporate administration expenses were budgeted to be $3.9 million (CAD$5.0 million) and are now forecasted to be $4.0 million (CAD$5.3 million) in 2016, mainly due to the impact of unbudgeted legal expenses and special project costs. Corporate administration expenses include all head office salaries and benefits, office costs, audit and regulatory costs, legal fees, investor relations expenses and all other costs related to operating a public company with listings in Canada and the United States.

Letter of credit and standby fees relating to the 2016 Credit Facility are expected to be $0.4 million (CAD$0.5 million).

QUALIFIED PERSON AND ASSAY PROCEDURES

The disclosure regarding the PEA was reviewed and approved by Peter Longo, P. Eng, MBA, PMP, Denison’s Vice-President, Project Development, who is a Qualified Person in accordance with the requirements of NI 43-101. The balance of the disclosure of scientific and technical information regarding Denison’s properties in the MD&A was prepared by or reviewed and approved by Dale Verran, MSc, Pr.Sci.Nat., the Company’s Vice President, Exploration, a Qualified Person in accordance with the requirements of NI 43-101.

Grade results reported herein as “eU3O8” refer to radiometric equivalent U3O8 derived from a calibrated total gamma down-hole probe. Radiometric equivalent U3O8 results are preliminary in nature and all mineralized intervals have been sampled and submitted for chemical U3O8 assay in accordance with Denison’s technical procedures. All Gryphon drill holes reported herein were drilled at a high angle to mineralization to allow for better evaluation of true thicknesses which are expected to be approximately 75% of the intersection lengths. For further details regarding the description of the data verification, assay procedures and the quality assurance program and quality control measures applied by Denison, please see Denison’s Annual Information Form dated March 24, 2016 available under Denison's profile on SEDAR at www.sedar.com, and its Form 40-F available on EDGAR at www.sec.gov/edgar.shtml.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Certain information contained in this MD&A 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.

In particular, this MD&A contains forward-looking information pertaining to the following: the likelihood of completing and benefits to be derived from corporate transactions, including the potential for receipt of any contingent payments; use of proceeds of financing activities; the estimates of Denison's mineral reserves and mineral resources; the results of the PEA and expectations regarding further studies, including the PFS; expectations regarding the toll milling of Cigar Lake ores; expectations regarding revenues and expenditure from operations at DES; expectations regarding the provision of management services to UPC; capital expenditure programs, estimated exploration and development expenditures and reclamation costs and Denison's share of same; expectations of market prices and costs; supply and demand for uranium; exploration, development and expansion plans and objectives; and statements regarding anticipated budgets. 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.

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 accurate and may differ materially from those anticipated in this forward looking information. For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the factors discussed in Denison's Annual Information Form dated March 24, 2016 under the heading "Risk Factors". These factors are not, and should not be construed as being exhaustive.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking information contained in this MD&A is expressly qualified by this cautionary statement. Any forward-looking information and the assumptions made with respect thereto speaks only as of the date of this MD&A. Denison does not undertake any obligation to publicly update or revise any forward-looking information after the date of this MD&A 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 Mineral Resources: This MD&A may use 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.

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, David D. Cates, President and Chief Executive Officer of Denison Mines Corp., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Denison Mines Corp. (the "issuer") for the interim period ended September 30, 2016.

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)

designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1

Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (COSO Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2

ICFR: Not applicable.

5.3

Limitation on scope of design: Not applicable.

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2016 and ended on September 30, 2016 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 3, 2016

Signed by “David D. Cates”

Name:

David D. Cates

Title:

President and Chief Executive Officer

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Gabriel (Mac) McDonald, Vice President Finance and Chief Financial Officer of Denison Mines Corp., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Denison Mines Corp. (the "issuer") for the interim period ended September 30, 2016.

Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)

designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)

material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)

(b)

5.1

5.2

ICFR: Not applicable.

5.3

Limitation on scope of design: Not applicable.

Date: November 3, 2016

Signed by “Gabriel (Mac) McDonald”

Name:

Gabriel (Mac) McDonald

Title:

Vice President Finance and Chief Financial Officer

Denison Mines Corp.

1100 – 40 University Ave

Toronto, ON M5J 1T1

www.denisonmines.com

PRESS RELEASE

DENISON REPORTS Q3 2016 RESULTS INCLUDING HIGHLIGHTS FROM

SUCCESSFUL SUMMER 2016 EXPLORATION PROGRAMS

Toronto, ON – November 3, 2016. Denison Mines Corp. (“Denison” or the “Company”) (DML: TSX, DNN: NYSE MKT) today filed its Consolidated Financial Statements and Management’s Discussion & Analysis (“MD&A”) for the period ended September 30, 2016. Both documents can be found on the Company’s website at www.denisonmines.com or on SEDAR (at www.sedar.com) and EDGAR (at www.sec.gov/edgar.shtml). The highlights provided below are derived from these documents and should be read in conjunction with them. All amounts in this release are in U.S. dollars unless otherwise stated.

David Cates, President and CEO of Denison commented “The summer exploration program at our Wheeler River project again showed the remarkable potential of the Gryphon deposit, through additional exploration drilling, to add pounds to the project’s already impressive resource base. Our exploration team has successfully expanded the mineralization associated with the Gryphon deposit A and B Series lenses and continues to increase the scope of the new D Series of lenses to the northwest of the deposit. Gryphon remains open in numerous directions and the team is currently compiling and interpreting results from the summer in order to plan for the winter 2017 drill program. In parallel, we are also continuing with engineering and environmental work as part of a pre-feasibility study initiated for the Wheeler River project earlier in 2016.”

2016 THIRD QUARTER PERFORMANCE HIGHLIGHTS

●

Completed highly successful summer 2016 exploration program at the Wheeler River property

The summer exploration program included 37 drill holes, for a total of 23,622 metres, focused on expanding the uranium mineralization in the vicinity of the Gryphon deposit and completing an initial set of infill and delineation holes. The results demonstrated that the Gryphon deposit is part of a large and robust mineralizing system that remains open in numerous directions. Key highlights include:

Expansion of strike length of Gryphon D Series mineralized lenses

The D Series lenses are located within 200 metres north and northwest of the Gryphon deposit. The lenses currently total 330 meters in collective strike extent and mineralization remains open along strike in both directions. The most northeastern section drilled to date, Section 5350 GP, was highlighted by the result in drill hole WR-507D2, which returned 9.39% eU3O8 over 1.6 metres, from 579.5 to 581.1 metres, and indicates the continued strength of the mineralizing system and significant potential along strike and down-plunge to the northeast (see Denison's Press Release dated September 7, 2016).

Discovery of additional high-grade mineralization associated with the Gryphon A and B Series lenses

Additional high grade mineralization was discovered down-dip and up-dip of the A and B Series lenses on the shallower, southwestern portion of the Gryphon deposit. Highlights include 2.5% eU3O8 over 4.4 metres from 744.8 to 749.2 metres in drill hole WR-674, and 1.2% eU3O8 over 11.4 metres from 692.7 to 704.1 metres in drill hole WR-602D1. This mineralization is interpreted to be associated with the Gryphon deposit’s previously defined A and B series lenses (see Denison's Press Release dated September 22, 2016).

The D Series lenses and the new high grade intersections associated with the A and B Series lenses are not included in the current mineral resource estimate for the Gryphon deposit, nor are they incorporated into the Preliminary Economic Assessment for the Wheeler River project, as detailed in the Company’s NI 43-101 technical report entitled “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, (the “PEA”) with an effective date of March 31, 2016. A copy of the report is available on the Company’s website and on both SEDAR and EDGAR.

●

Initiated infill and delineation drilling at the Gryphon deposit

To support the pre-feasibility study (“PFS”), initiated for the Wheeler River project during the second quarter of 2016, Denison commenced an initial infill and delineation drilling program at the Gryphon deposit. Infill drilling is required at Gryphon to increase the confidence in the mineral resources estimated from an inferred to an indicated level. During the summer, five drill holes were completed using a directional drilling method to reduce time and costs, and improve drilling accuracy. Highlight results include drill hole WR-668D2, which intersected 1.5% eU3O8 over 14.4 metres (including 2.5% eU3O8 over 7.9 metres and 1.5% eU3O8 over 1.0 metre), and drill hole WR-668, which intersected 0.93% eU3O8 over 14.1 metres (including 2.1% eU3O8 over 3.7 metres and 1.4% eU3O8 over 1.3 metres) and 2.4% eU3O8 over 7.3 metres (including 3.7% eU3O8 over 4.5 metres) (see Denison's Press Release dated October 6, 2016).

●

Earned $3.4 million in toll milling revenue from McClean Lake during the first nine months of 2016

●

Entered into a transaction to acquire the Hook-Carter property from ALX Uranium

In October 2016, Denison executed a definitive agreement with ALX Uranium Corp. (“ALX”) to acquire an immediate 80% ownership of the Hook-Carter property in exchange for the issuance of 7.5 million common shares of Denison. Denison also agreed to fund ALX’s share of the first CAD$12,000,000 in expenditures on the project. The Hook-Carter property consists of 28 claims, totaling 16,805 hectares, and is located to the northeast and on trend of the Triple R deposit, Arrow deposit and Spitfire discovery in the southwestern portion of the Athabasca Basin region, in northern Saskatchewan. Regulatory approvals required for the acquisition to proceed have been received, and the parties expect to close the transaction in early November 2016.

ABOUT DENISON

Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. Including its 60% owned Wheeler River project, which hosts the high grade Phoenix and Gryphon uranium deposits, Denison's exploration portfolio consists of numerous projects covering over 350,000 hectares in the infrastructure rich eastern portion of the Athabasca Basin region. Denison's interests in Saskatchewan include a 22.5% ownership interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill, which is currently processing ore from the Cigar Lake mine under a toll milling agreement, plus a 25.17% interest in the Midwest deposit and a 63.01% interest in the J Zone deposit on the Waterbury Lake property.

Denison is also engaged in mine decommissioning and environmental services through its Denison Environmental Services division (“DES”) and is the manager of Uranium Participation Corp. (“UPC”), a publicly traded company which invests in uranium oxide and uranium hexafluoride.

SELECTED QUARTERLY FINANCIAL INFORMATION

(in thousands)	As at September 30, 2016		As at December 31, 2015

Financial Position of Continuing Operations:
Cash and cash equivalents	$	11,829	$	5,367
Debt instruments (GICs)		-		7,282
Cash, cash equivalents and debt instruments	$	11,829	$	12,649

Working capital	$	20,166	$	12,772
Property, plant and equipment	$	190,408	$	188,250
Total assets	$	230,601	$	212,758
Total long-term liabilities	$	38,904	$	38,125

	Three Months Ended				Nine Months Ended
(in thousands, except for per share amounts)		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015

Results of Continuing Operations:
Total revenues	$	3,489	$	3,526	$	10,482	$	8,783
Net loss	$	(2,506)	$	(3,608)	$	(10,783)	$	(11,443)
Basic and diluted loss per share	$	-	$	(0.01)	$	(0.02)	$	(0.02)

RESULTS OF CONTINUING OPERATIONS

Revenues

The Company’s share of toll milling revenue during the three months ended September 30, 2016 totaled $1,037,000. Revenue from DES during the three months ended September 30, 2016 was $2,077,000 and revenue from the Company’s management contract with UPC was $375,000 for the same period.

Operating expenses

Operating expenses in the Canadian mining segment include depreciation, mining and other development costs, as well as standby costs. Operating expenses during the three ended September 30, 2016 were $736,000, including $533,000 of depreciation from the McClean Lake mill, associated with the processing of U3O8 for the CLJV.

Operating expenses at DES during the three months ended September 30, 2016 totaled $1,787,000 and relate primarily to care and maintenance, and environmental consulting services provided to clients and include labour and other costs.

Exploration and Evaluation

The Company’s focus remains on the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada, with a significant portfolio of projects covering over 350,000 hectares in total. Denison’s share of exploration and evaluation expenditures was $3,308,000 during the three months ended September 30, 2016.

Wheeler River Project

Denison’s share of exploration costs at Wheeler River amounted to $1,736,000 during the three months ended September 30, 2016. Exploration success at Wheeler River was highlighted by the continued expansion of the D Series of mineralized lenses occurring to the north and northwest of the Gryphon deposit. The collective strike length of the D Series lenses has increased to 330 metres following the completion of the summer 2016 exploration program. During the quarter, exploration drilling also discovered additional high grade mineralization down-dip and up-dip of the A and B Series of lenses on the shallower, southwestern portion of the Gryphon deposit. In addition, follow-up exploration drilling was completed on the K-West trend, approximately 500 metres west of Gryphon, where new uranium mineralization was discovered during the second quarter. The follow-up drilling encountered an extensive alteration zone and, together with a favourable geological setting, suggest continued potential for the discovery of high grade uranium mineralization along strike.

Denison’s share of evaluation costs at Wheeler River amounted to $323,000 for the same period and was mainly related to the initiation of PFS activities, including various engineering data collection activities.

Exploration Pipeline Properties

During the third quarter of 2016, the Company managed or participated in four other drilling exploration programs (three operated by Denison). Highlights include the following:

At Waterbury Lake (Denison 63.01% interest and operator), two drill holes for a total of 1,077 metres were completed at the Hamilton Lake target area. The second drill hole, completed 75 metres west of the first drill hole of the program, intersected a 30 metre wide fault zone in the sandstone, approximately 85 metres above the unconformity (at 426 metres) and returned several intervals of weak uranium mineralization immediately above the unconformity. The presence of weak uranium mineralization, highly faulted graphite-rich basement rocks and a 20 meter reverse unconformity offset indicate this untested trend is favorable for unconformity-related uranium deposits.

At Crawford Lake (Denison 100% interest), two holes were completed, for a total of 1,706 metres, targeting the CR-3 conductive trend. The drill holes both intersected significant sandstone alteration and graphitic basement rocks, however no elevated radioactivity or uranium mineralization was encountered. Despite these results, the CR-3 trend remains highly prospective with the previous discovery of weak uranium mineralization and both strong sandstone and basement alteration present.

At Hatchet Lake (Denison 64.36% and operator), 2,040 metres of drilling was completed including five widely-spaced holes at the Hatchet South target area and a single hole at the Tuning Fork target area. No significant results were obtained. In addition, a land-based radon and soil sampling program was completed over the southeastern extension of the Richardson Lake Trend in an effort to identify zones of elevated radon and soil geochemical concentrations potentially related to an underlying bedrock source to assist with target generation for future drilling programs in the area.

At McClean Lake, a project operated by AREVA Resources Canada (Denison 22.50% interest), a total of seven drill holes were completed for a total of 2,850 metres. The objective of the program was to test for basement-hosted mineralization occurring down-dip or down-plunge of the previously mined Sue deposits. Localized weak basement mineralization was reported with highlight results including hand-held scintillometer probe peaks of 4,558 cps at 364.8 m in drill hole S-835 and 24,052 cps at 186.2 m in drill hole S-836.

General and administrative expenses

Total general and administrative expenses were $1,020,000 during the three months ended September 30, 2016. These costs are mainly comprised of head office salaries and benefits, office costs, audit and regulatory costs, legal fees, investor relations expenses, project costs and all other costs related to operating a public company with listings in Canada and the United States.

RESULTS OF DISCONTINUED OPERATIONS

In the third quarter, the Company recognized a gain on disposal of $9,050,000 for the Mongolian Mining division. On September 20, 2016, the mining license certificates for all four Mongolian projects sold to Uranium Industry a.s. (“UI”) were formally issued by the Mineral Resources Authority of Mongolia. Under the agreement with UI, the Company is entitled to $10 million of proceeds within 60 days of issuance of the licenses.

No expenditures were incurred in the African or Mongolian Mining division in the quarter.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $11,829,000 at September 30, 2016. The Company holds the large majority of its cash, cash equivalents, and investments in Canadian dollars. As at September 30, 2016, the Company’s cash, cash equivalents and current investments amount to CAD$15.5 million.

The Company’s CAD$24 million credit facility is fully utilized for non-financial letters of credit in relation to future decommissioning and reclamation plans. The facility contains a covenant that requires the Company to maintain a minimum cash balance of CAD$5 million on deposit with the Bank of Nova Scotia.

OUTLOOK FOR 2016

The Company’s budget was modified at the end of the second quarter of 2016 (the “Previous Outlook”) and the outlook has been further modified (the “Current Outlook”), at the end of the third quarter of 2016, to reflect actual results as at September 30, 2016, and to incorporate updated estimates for the remainder of the year.

(in thousands)	PREVIOUS OUTLOOK 2016	CURRENT OUTLOOK 2016	Actual to September 30, 2016(2)
Canada (1)
Toll Milling Revenue & Mineral Sales	$ 4,540	$ 4,540	$ 3,357
Development & Operations	(2,400)	(1,810)	(1,189)
Mineral Property Exploration & Evaluation	(12,000)	(12,000)	(10,598)
	(9,860)	(9,270)	(8,430)
Africa
Zambia, Mali and Namibia	(520)	(520)	(520)
	(520)	(520)	(520)
Other (1)
UPC Management Services	1,530	1,300	1,019
DES Environmental Services	920	1,130	922
Corporate Administration & Other	(4,250)	(4,420)	(3,392)
	(1,800)	(1,990)	(1,451)

Total	$ (12,180)	$ (11,780)	$ (10,401)

(1)

Outlook figures have been converted using various period average US$ to CAD$ exchange rates ranging from of 1.29 to 1.37.

(2)

The Company budgets on a cash basis. As a result, actual amounts represent a non-GAAP measure and exclude non-cash depreciation and amortization amounts of $2,244,000.

The Outlook for Development and Operations have been reduced by $590,000, mainly due to the deferral of certain projects previously planned to occur in the fourth quarter of 2016.

The Outlook for DES has been increased due to better than expected operating performance associated with work activities at client care and maintenance sites.

For more information, please contact

David Cates (416) 979 – 1991 ext 362

President and Chief Executive Officer

Sophia Shane (604) 689 - 7842

Investor Relations

Follow Denison on Twitter @DenisonMinesCo

QUALIFIED PERSON, ASSAY PROCEDURES AND FURTHER DETAILS

The disclosure of scientific or technical information regarding Denison’s properties in this press release and the MD&A was prepared by, or reviewed and approved by, Dale Verran, MSc, Pr.Sci.Nat., the Company’s Vice President, Exploration, a Qualified Person in accordance with the requirements of NI 43-101.

Further details regarding the Gryphon deposit and the current mineral resource estimates are provided in the NI 43-101 Technical Report for the Wheeler River project titled "Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada" dated April 8, 2016 with an effective date of March 31, 2016. A copy of this report is available on Denison's website and under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml. Illustrative figures for the Gryphon deposit and drill holes referred to herein are available in the Company’s 2016 press releases dated October 6, September 22 and September 7.

Cautionary Statement Regarding Forward-Looking 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", "budget", "scheduled", "estimates", “forecasts", "intends", "anticipates", or "believes", or the negatives and/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”. In particular, this press release contains forward-looking information pertaining to the following: the likelihood of completing and benefits to be derived from corporate transactions; expectations regarding further studies on material properties, including the PFS; expectations regarding the toll milling of Cigar Lake ores; expectations regarding revenues and expenditure from operations at DES; expectations regarding the provision of management services to UPC; capital expenditure programs, estimated exploration and development expenditures and reclamation costs and Denison's share of same; and exploration, development and expansion plans and objectives and statements regarding anticipated budgets. 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.

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 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 accurate and may differ materially from those anticipated in this forward looking information. For a discussion in respect of risks and other factors that could influence forward-looking events, please refer to the factors discussed in Denison's Annual Information Form dated March 24, 2016 under the heading "Risk Factors". These factors are not, and should not be construed as being exhaustive. Accordingly, readers should not place undue reliance on forward-looking statements.

The forward-looking information contained in this press release is expressly qualified by this cautionary statement. Any forward-looking information and the assumptions made with respect thereto speaks only as of the date of this press release. 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 Mineral Resources: This press release may use 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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Denison Mines Corp.

/s/ Amanda Willett

Date: November 4, 2016

Amanda Willett

Corporate Counsel and Corporate Secretary