Denison Mines Update World Nuclear Symposium 2025 | David Cates and Geoff Smith

Key Concepts

• Project Financing: The process of funding a specific project, often with limited recourse to the project sponsor's general assets.
• Capital Expenditure (Capex): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, buildings, technology, or equipment.
• Convertible Notes: Debt instruments that can be converted into equity (shares) of the issuing company under certain conditions.
• US-Style Converts: Convertible notes that offer the issuer the option to settle conversion in cash, equity, or a combination, unlike conventional converts which typically result in equity dilution.
• Coupon Cost: The interest rate paid on a debt instrument.
• Capped Call Structure: A financial derivative used to limit the dilution from convertible note conversions by setting a maximum conversion price.
• Effective Conversion Price: The actual price at which a convertible note can be converted into equity, considering any hedging instruments like capped calls.
• Dilution: The reduction in the ownership percentage of existing shareholders when new shares are issued.
• Vanilla Debt: Standard debt financing without complex features or options.
• Permitting Process: The regulatory procedures required to obtain approval for a project to proceed.
• Canadian Nuclear Safety Commission (CNSC): Canada's federal nuclear regulator responsible for licensing and oversight.
• Environmental Assessment (EA): A process to evaluate the potential environmental impacts of a proposed project.
• Pollutant Control Facility: A facility designed to manage and treat pollutants.
• License to Construct: A regulatory approval required to begin construction of a facility.
• Interventions: Submissions made by the public or stakeholders during regulatory hearings, which can be positive or negative.
• Final Investment Decision (FID): The formal decision by a company to proceed with a project after all necessary approvals and financing are secured.
• Detailed Design Engineering: The process of creating comprehensive technical plans and specifications for a project.
• Procurement: The process of acquiring goods and services.
• Long-Lead Items: Components or equipment that have extended manufacturing or delivery times, requiring early procurement.
• World Nuclear Symposium (WNA): An international event for the nuclear industry.
• Utilities: Companies that provide essential services like electricity or gas.

Project Financing for Phoenix Project and Convertible Notes Raise

Rationale for Convertible Notes Raise

David, from Denison, explains the recent US $345 million raise through convertible notes, emphasizing the strategic choice of US-style converts. Unlike conventional Canadian converts, these offer Denison the flexibility to settle conversions in cash, equity, or a combination. This flexibility was crucial because Denison wanted to avoid the dilution typically associated with convertible debt when the share price rises. The ability to repay in cash makes the instrument function like vanilla debt in many scenarios.

Cost Savings and Dilution Mitigation

The US-style convertible notes were secured at an ultra-low coupon cost of 4.25%. Denison estimates this has saved them over US $100 million in interest compared to conventional bank-led project financing.

A key innovation in this raise is the implementation of a capped call structure. This is reportedly the first instance for a TSX-listed Canadian company using US-style converts with a capped call. The capped call effectively moves the effective conversion price for Denison up by approximately 100% from pre-financing levels, to around US $4.32 per share. This structure means that until Denison's share price exceeds US $4.32, there is a potential for no equity dilution from the convertible notes.

Strategic Timing and Market Conditions

The decision to execute the raise now was driven by favorable market dynamics, specifically a strong convertible market in the US. The significant interest in their offering allowed Denison to secure excellent pricing. The company had confidence in its ability to execute the Phoenix project and needed funding in place to do so. This early financing allows Denison to immediately execute on the project as soon as permits are received, providing a significant advantage.

Investor Base and Global Distribution

A significant portion of the interest in the convertible notes came from the US, tapping into a broad group of institutional investors who are often new to Denison's story and may not participate in regular equity offerings. The distribution was global, including Canada and Europe.

Future Financing and Balance Sheet Strength

While the convertible notes and physical uranium holdings are sufficient to fund the execution of the Phoenix project, Denison may consider additional credit facilities like overrun facilities or bank revolvers for growth initiatives.

Following the raise, Denison's balance sheet is exceptionally strong, with over US $700 million in cash, cash equivalents, uranium, and investments. This financial position provides control over their destiny and avoids financing overhangs, positioning them to execute the Phoenix project promptly upon permit approval.

Permitting Process and Timeline

Approvals Receipt Phase

Denison has entered the final phase of its multi-year permitting process, termed the "approvals receipt phase." No new work is required on the permitting front; the focus is on finalizing approvals.

• Provincial Approval of Environmental Assessment (EA): Received in the summer, this kicked off the final phase.
• Additional Provincial Approval for Pollutant Control Facility: This is required but not considered critical path.
• Canadian Nuclear Safety Commission (CNSC) Hearings: These are the critical path for federal approvals.
  • Two Federal Approvals: EA approval and a license to construct.
  • Joint Two-Part Hearing: The EA and license to construct will be heard together.
    • Part 1 (October): Presentations by CNSC staff and Denison.
    • Part 2 (Early December): Public feedback and interventions (positive or negative).
  • Decision Expected: Early 2026, after deliberation by the commission.

Post-Approval Timeline

Upon receiving the decision in early 2026:

• Final Investment Decision (FID): An official company decision to proceed with construction.
• Construction Decision: Follows FID.
• Prompt Construction Execution: Denison is organized to start construction immediately.

Project Execution and De-Risking

Background Preparations

While the regulatory team focuses on hearings, engineering, operations, and procurement teams are ensuring readiness for project execution:

• Detailed Design Engineering: Over 75% complete, approaching 95-100% by year-end. Many first-year construction scopes are already at 95-100% complete.
• Procurement: Long-lead items have been procured since late 2023.
• Budget: A significant budget of over $70 million was allocated for the current year for engineering and procurement of key items.

This proactive approach ensures that Denison can "hit the ground running" once approvals are granted.

Broader Company Activities and Investor/Utility Engagement

Beyond Phoenix

Denison's activities extend beyond the Phoenix project, including a pipeline of projects and partnerships with Orano. The company has also returned to being a producer with its success at McClean Lake.

World Nuclear Symposium Engagement

David is attending the World Nuclear Symposium in London to meet with investors and utilities.

• Utility Meetings: Utilities are interested in the project's status, financing, technical de-risking, and permitting. Their ultimate goal is to secure access to uranium.
• Investor Meetings: Investors seek exposure to the financial returns from uranium sales.
• Commercial Focus: Denison's team has been heavily engaged in the commercial space this year, focusing on utility engagement.
• Strategic Patience: Denison is taking a strategically patient approach to selling future production, aiming to keep utilities informed and build confidence in the project.

Conclusion

Denison has strategically secured significant funding for its Phoenix project through a US $345 million convertible notes raise, leveraging US-style converts and a capped call structure to achieve low-cost financing and mitigate dilution. With over US $700 million in financial resources, the company is well-positioned to execute the project. The permitting process is in its final stages, with a decision from the CNSC expected in early 2026. In parallel, Denison has made substantial progress on detailed engineering and procurement, ensuring readiness for construction. The company is also actively engaging with utilities and investors, highlighting its robust financial position and project development progress.