TSX Commentary

Denison Mines (DML) – $1.53 – 2009 Operations (in line), 2010 Forecast and 5 Year Business Development Plan
Underperform, Speculative, Price Target: $1.00
On January 25, 2010, Denison announced its 2009 operation results, provided an outlook for 2010 and briefly outlined its plans to reach 10 million pounds U3O8 (Uranium) production by 2020. Denison produced 1.40 million pounds U3O8 in 2009, slightly better than the 1.39 million pounds RBC CM had forecast. Sales were also slightly better than anticipated at 1.10 million pounds compared to RBC CM’s 1.06 million pound estimate. Price realizations were more or less in line at $51.17 per pound, 1% better than RBC CM’s estimate of $50.82 per pound. For 2010, Denison’s guidance for uranium production was ~300,000 pounds lower than expected while vanadium production is forecast to be 1.2 million pounds higher. RBC CM has increased its forecasts for both uranium and vanadium production in 2010, but is remaining conservatively lower than guidance. Cash cost for 2010 are forecast to be $35.15 per pound, 18% higher than RBC CM had forecast. Denison also outlined its plan to attain 10 million pounds per year by 2020 through the development of mines in Canada, the U.S. and Africa. RBC CM views this as a worthy goal, but thinks it will be very hard to attain. RBC CM views Denison’s U.S. projects as very high cost and relatively low quality – for that reason, RBC CM has forecast no production beyond 2015 other than 2 million pounds attributable to Denison from the development of the Midwest project in 2018. Denison’s African project is Mutanga in Zambia. RCM CM views this project as one with very low financial returns, even using $70 per pound U3O8.