Denison Mines – uranium producer in the making

AUDIO:

TRANCSCRIPT:

Maurice Jackson:  Welcome to Proven & Probable. I’m your host, Maurice Jackson, and joining us today is the president and CEO of Denison Mines, Mr. David Cates. David, thank you for joining us today.

David Cates:  Yeah, thanks Maurice. My pleasure.

Maurice Jackson:  You know, David, under your tenure at Denison Mines, it has become one of the most highly regarded names in the natural resource space specifically with your company’s contributions and success in uranium. Offline, I’ve had discussions with some of the biggest names in the natural resource space and they basically agree that Denison Mines is going to be the next producer in the making, so it’s quite an honor to have you here with us. So thank you again.

David Cates:  Of course, my pleasure, Maurice.

Maurice Jackson:  Since we last spoke at the Sprott-Stansberry conference, can you please share with listeners what is uranium used for and what are the current supply and demand fundamentals of uranium.

David Cates:  Sure. I mean this is a question we get all the time. Everyone wants to know from Denison what do we think about the uranium space. You know, right now, you’ve got 489 reactors that are operating around the world across 30 countries, but the most exciting part of the story is that we’ve got 69 new reactors that are under construction. These are reactors where we’ve actually got concrete being poured and dollars being put in to the ground. And then we’ve got another 158 reactors that are either ordered or planned.

And ordering and planning a reactor, that’s just not, you know, wishing that you build one. There’s a process involved here with permitting and licensing and all of this stuff requires significant amount of capital. So when we see those reactors being in queue to come to the market, it’s not that—it’s pretty realisable I guess is what I would say that these reactors will actually be built because of the investment that goes into it in all stages.

Maurice Jackson:  Okay. With that being said as well, have the reactors in Fukushima, Japan, have they come online?

David Cates:  Yeah. So we are starting to see the recovery in Japan. 2015 was actually quite a milestone year for the industry. We did see the first reactors come back online and achieve commercial production in Japan after Fukushima and we’ve seen additional reactors come online already in 2016. So at the end of the day, we’re looking like we’ll see another 5 units or so later within the next year or so out of Japan and ultimately, you know, 20 to 30 of these reactors were expecting to come back online at the end of the day once Japan is fully reembracing nuclear energy.

Maurice Jackson:  Now with Japan coming back online, how will that impact the supply and demand of uranium?

David Cates:  Yeah, it’s interesting. You know, Japan has been an overhung for a while in the space because they haven’t been in the market. And obviously them coming back to the market means that they’re going to be using some of their inventories and using material. But at the end of the day, Japan is not really the story when you look at the fundamentals in the space. The story is really China because as much as Japan will be coming back to, you know, say half of their fleet, China is adding hundreds of reactors, right? So, Japan really is less relevant than people might think when it comes to the grand scheme of things.

Maurice Jackson:  You know, thank you for clarifying that. As well with—speaking with supply and demand, how does oil and gas affect the price of uranium? Or does it at all?

David Cates:  Well, it shouldn’t and it doesn’t seem to affect the actual price of uranium, but oil and gas does have significant bearing on uranium equities and that’s a bit of an inadvertent result but, you know, there really isn’t a connection other than oil and gas being a source of energy and uranium being a source of energy, but they’re not really competing with each other because nuclear power is all about base load energy. It’s about keeping the lights on 24 hours a day. It’s about hospitals, you know, things that need power all times, large infrastructure.

And people and countries commit to nuclear energy for the reliability of it and the relatively low cost. And when they commit, they spent billions of dollars in infrastructure. Now, oil and gas is more of a variable energy source and so when you do see sort of the regular consumption from, say, global economic activity change and it makes sense that oil and gas also is affected and it moves up and down.

But, uranium really isn’t in that variable space and so they don’t really compete with each other outside of being sources of energy. Now if you contrast that to what’s going on in the equities, you see that uranium stocks often trade with the price of oil, and we actually were looking at Denison just in a 2-year analysis of Denison in Canadian dollar terms and we looked at oil in Canadian dollar terms.

And over the 2 years, the two have traded very closely together by the end of this 2-year window and both are down significantly, you know, there’s no surprise with that. But by comparison, the price of uranium in Canadian dollar terms is up. And so there’s been this tremendous divergence between uranium equities and Denison is not alone. I mean Cameco and other players have had similar trajectories.

These uranium companies have basically diverged from what’s happening in uranium and the price of uranium. And that’s where it all seems very interesting because if you’re a value investor, there really is an opportunity there because at the end of the day, the uranium market will dictate the uranium price, not oil and gas. But right now, it seems like oil and gas has dictated the price of the uranium equities.

Maurice Jackson:  Well, thank you for that clarification. You know, David, based on your analysis, the price of uranium should be significantly higher right now specifically with the supply and demand fundamentals as you just presented with us. Conversely, though, investors very seldom buy low and sell high. In your experience, is this where the astute investors deploy capital to companies that have proven management large high-grade deposits and a solid balance sheet such as Denison Mines?

David Cates:  Yeah, Maurice, I mean that’s 100% online with what I’m talking about. We’ve basically got a situation where the uranium equities including Denison are undervalued. You look at where you want to put your money to take advantage of this fundamental rise in the price of uranium that we believe will happen. And really, what choices do you want to make? I think you do want to look for reliable and trusted management teams. I think Denison is unmatched in that area because of our connection with Lukas Lundin. He’s our executive chairman and there’s few in the mining space that have had the success of Lukas Lundin.

And then I think you also want to look at the quality of assets in the jurisdiction you’re investing in. And I think Canada and the assets that Denison has in the eastern part of the Athabasca basin are also difficult to rival. We’ve got the Phoenix deposit and the Gryphon deposit and I’m sure we’re going to talk more about those on the Wheeler River property. You know, this is a property that’s amongst tremendous amounts of infrastructure from the existing uranium mines and mills in the eastern part of the basin that are operated by Cameco and AREVA.

And really, when you want to look at investing in this space, right? You can be investing on the speculative side or you can be investing on the torque side, and I think what Denison is going to offer better than anyone in the space in the coming months and years is torque because when this price rises, right, the big investors or the institutional investors, what they want to buy into is the company that will be able to take advantage of it the most. And the company that typically takes advantage of a rising price environment the most from a share price standpoint is the developer. It’s the company that is going to be the producer. It’s not always the producers because they just don’t offer the same leverage and it’s not always the exploration or junior companies because they really may not be able to develop their assets in order to take advantage of the rise in price.

So it’s that producer in the making that stands to maximize return for shareholders and that’s really what Denison has to offer is that path to production, and I think you’re right the astute investor could see that as quite an apparent opportunity right now.

Maurice Jackson:  David, you touched on several subjects there that I definitely want to delve into a little bit further. Geographically, let’s share with the listeners where is Denison Mines? Where your projects right now?

David Cates:  Yeah, absolutely. I mean Denison has been a diversified company before and we used to be in the U.S. and we used to be in Mongolia. We’ve sold both of those interests. Right now, the company is focused in Saskatchewan in a district called the Athabasca basin and we’re specifically focused in the eastern part of the Athabasca basin. And the reason why we’re there is because we think the infrastructure in that district has a meaningful impact on the economics of projects and being able to leverage the milling and mining infrastructure in that district is critical.

You know, we’re more than just an exploration company and a development company. We actually have an interest in a mill that is operating in the eastern part of the Athabasca basin. It’s the McClean Lake mill. Our partner there is AREVA. This mill is in operation right now. It’s processing all of the ore from Cigar Lake under a toll-milling agreement and that’s generating cash flow from us. But that mill is in the eastern part of the basin and we’re focused there because we see a true synergy between our properties in that particular piece of infrastructure.

Maurice Jackson:  Well, thank you for sharing that. You know, you’ve mentioned the Athabasca region here. Talk to the listeners about how rich uranium is in that area compared to global?

David Cates:  Yeah, I mean Maurice, it’s orders of magnitude higher. You know, in Africa, you’re talking in the PPMs when you’re dealing with grades. In the Athabasca—let me give you this comparison just using our own deposits. In the Athabasca, you have high grade and then you have exceptionally high grade and both are orders of magnitude higher than grades around the world.

So at Phoenix, which is one of our deposits at Wheeler River, we have an average grade of 19%. Now, to compare that to deposits around the world, it only really compares to Cigar Lake and McArthur River, which are also in the Athabasca basis. So at 19%, Phoenix not having been developed at this point is the highest grade undeveloped deposit in the world.

Now, if you look at Gryphon which is another deposit on the Wheeler River property, it grades at 2.3% and it seems like that’s not very high grade by comparison to 19%. But 2.3% is still again orders of magnitude higher grade than what you would find on average around the world.

Maurice Jackson:  Thank you for sharing that as well. You know, so I’m listening here. I hear grade and I hear infrastructure. Regarding the infrastructure here, you have highway and you also have electricity, is that correct?

David Cates:  It’s true. At Wheeler River, the power line and the highway that are connecting the McArthur with the Key Lake mill runs right through our property and it’s a fantastic thing when you take investors and analysts. We’ve toured them around Wheeler River. We were last there in September with a number of our analysts and, you know, we fly into an airstrip that’s already there at Key Lake with charter jets, all very comfortable, you know, there’s a wash room and all sorts of regular things at the small airport.

We jumped into our pickup trucks and they drive us on a provincial highway. It’s an all-weather highway. We’re driving on the provincial highway. While we’re on the road, we see the power line right next to us running along the road and then we happen to see ore trucks hauling ore from McArthur River down the Key Lake. And we see all of that as we’re taking these investors up to Wheeler River. We get to the property. We cut off under our own road and within a few minutes, we’re at our camp at Wheeler River.

It’s remarkable to do that and to be in such a remote location in Northern Saskatchewan and yet have all of that large-scale infrastructure ready and waiting for us to add another mine.

Maurice Jackson:  It’s remarkable to hear that because that means you’re really ahead of the curve and that speaks a lot of course to management which I do want to get to in just a minute. But before we do that, I do want to address, can you share— for the listeners, lets discuss  the sale with Mongolia, you’ve already received the first payment. Talk to listeners about that, please.

David Cates:  Sure. I mean we identify Mongolia as a non-core asset and so we set out in 2015 to monetize it and we’re successful in reaching an agreement in the 4^th quarter of the year with a group out of the Czech Republic called Uranium Industry. So we brought in 1.25 million U.S. on closing. The really exciting part of this deal though is that with our help, uranium industry has applied for its mining licenses in Mongolia. And if they receive these mining licenses, then Denison has the right to additional payments under our agreement. And so we could see an additional 10 million dollars U.S. come in if we obtain 2 of the mining licenses.

And on top of that, if Uranium Industry does develop these projects, we could see a further 2 million dollars U.S. come in as well in sort of milestone payments down the road. So, altogether you’re looking at a deal over 13 million U.S. dollars for assets in Mongolia that really don’t fit with our core objective of becoming a producer in the Athabasca basin. So great deal on both sides I think.

Maurice Jackson:  Absolutely. And before we leave this discussion here, don’t you have some exciting news regarding Uranium Participation today?

David Cates:  Yeah, we do, we do. We’re successful in negotiating a new 3-year deal with UPC to act as a manager for UPC. So, UPC of course has traded on the TSX under the symbol U and Denison has been a partner with UPC for many year acting as manager. You know, what really excites me about continuing to work with UPC is the fact that it allows Denison to really assert itself as a leader in the uranium industry.

UPC is a very unique company holding uranium for the long term. It requires that we think a fair amount about our role in the uranium industry and really examine where nuclear energy is going. And so that’s very interesting for us to be engaged in that rather than just being a mining company out there.

At the same time, Maurice, it’s critical to the Denison story because managing UPC generates cash flow for our company and so we do look at around—in our budget for this year, we do have about 2 million dollars Canadian coming in for managing UPC and that’s very important for our shareholders because it means that we are regenerating cash internally rather than having to dilute our existing shareholders with equity financings.

Maurice Jackson:  You know, you’re providing a wealth of information and I really do appreciate it. So you’re procuring capital right now when the market is depressed. You have existing infrastructure and I do want the audience members to take critical note what Mr. Cates has mentioned here as well that Denison Mines owns 22.5% stake in a mill that is germane to the task which is very important here, meaning that it’s designed for processing high-grade uranium, which is exactly what Denison Mines consists of. So, again, kudus to you sir.

David Cates:  Oh, thanks, Maurice. I mean we’re really trying to bang the drum on the story right now and we really appreciate you being plugged into our story as well.

Maurice Jackson:  Oh, thank you. Now just for round numbers if we can, how much capital expenditures do you believe that you’re saving by having the infrastructure, by having the mill? How much does that reduce the expenses for you?

David Cates:  Well, it’s a tough number to give, Maurice, definitely because, you know, not every mill is created equal and we do have a very special mill up at McClean Lake as you mentioned geared for processing very high grade ores and that doesn’t come cheap. But, you know, I think when we look at the analyst community and look at the benchmark numbers that they’ve used to try to value the McClean Mill, I think it’s safe to say that most people are comfortable viewing that mill as having a replacement value somewhere around a billion dollars.

So, you know, if our share of it is 22.5%, that’s arguably over 200 million dollars in value in that mill. That said, it’s a 24 million pound mill and it will be by the end of this year and we probably won’t be able to get to 24 million pounds of annual capacity. So, for building a project like Wheeler River, you know, it’s hard to know exactly how much capital is saved but you’re certainly talking hundreds of millions of dollars. I think this is a good maybe opportunity just for me to talk about one other really critical part of our story right now and that has to do with the PEA that is in progress for our Wheeler River project.

As we’ve talked about, we’ve got 2 deposits on this project—Phoenix and Gryphon. You know, together we have 70 million pounds at 19% over at Phoenix and we’ve got 43 million pounds at 2.3% at Gryphon. We’re really excited about looking at whether we can co-develop these deposits. And so that’s what the PEA is focused on. The PEA is only months away. It’s been in progress for a few months, and I think just to bring it up because your point about how much infrastructure or how many dollars in infrastructure we will save or where you’re really going to see that is in our economics for co-developed projects because in our project, we’re going to look at a toll-milling scenario rather than building a mill, and I think that that’s really important for the market to understand because that 22.5% interest in the mill gives us comfort that there is really a good chance that we’ll be able to send Wheeler River or to McClean and it certainly doesn’t hurt that McClean has excess capacity starting in 2016.

Maurice Jackson:  Is there a possibility or an interest, I should say as well, to procure a larger position in the McClean mill?

David Cates:  Well, Maurice, I would love to, but I’ll tell you one thing about these mill interests is that they are hard to come by and there are very few people that actually own an interest in a mill in the Athabasca basin and you can count them on one hand. You have Cameco, you have AREVA and then you have Denison and you have our third partner OURD at McClean. So, to be honest, as much as I’d love to acquire it, I suspect that it’s not for sale by any other partners.

Maurice Jackson:  Well, thank you for clarifying that as well. Now regarding the PEA, you believe it will be completed just for the listeners timeline—are we looking at the summertime? Are we looking at closer?

David Cates:  Yeah, you know what, it’s probably in the next 2 months. We’ve guided the market in the first half of the year, so it’s not that far away at this point. That’s what I would expect and I think we’re going to have some good exploration results leading up to it and I think the PEA—you know, what’s going to be interesting about this PEA is that we’re going to prepare it in a way that fits with our profile.

So our profile like we’ve talked about is about being the next producer. And so if we want to be the next producer, we have to be talking about a time horizon that’s more current. We can’t just use something like the future price. We can’t go out there and say, you know, we all believe the price of uranium is rising, look, we do believe that. But at the same time, you know, can you go get money from the bank based on an assumption that the price will be $70 when your mine is in production? And I’ll tell you, you can’t.

So what’s going to be really interesting about our PEA is we’re going to use the prices that are in the market today. And so that will really show how strong the economics are for this project because the reality is that we won’t be producing tomorrow, right? It’ll take years to produce, and the uranium price will definitely rise. But if this project can make money today, then we believe that we can go to the market, the equity markets and the debt markets and get money for this project. And that becomes a critical part of our story because we want people to understand us as really being the next producer, not just a company that has a deposit that someday will be developed or will be acquired by some other company.

Maurice Jackson:  You’re correct on that as well. You know, I know I speak for the listeners as well. We’re excited to look—we’re looking forward to the PEA being released here. Switching gears, let’s discuss the company here a little bit more in depth. What are the company’s goals—and you’ve kind of touched on here—and how do you plan to accomplish them?

David Cates:  I mean our objective right now is quite simple. Number one it’s always been shareholder value, okay. There’s no doubt about that. The reason why we’re focused right now on becoming the next producer is because of that maximum torque that we talked about. We think that gives our shareholders the best bang for their investment buck by finding that spot in time for the uranium market to surge. As soon as those uranium prices move, dollars are going to come in to that producer in the making spot and that’s really our objective in the near term is to claim that spot in the market.

Maurice Jackson:  Okay. And what can go wrong and how will investors know what is going wrong and what will you do if it goes wrong?

David Cates:  Yeah. I mean that’s—you know, it’s a hard-hitting question, Maurice, but it’s a good one. You know, it will go wrong if our economics on our project aren’t good enough to actually make money in a reasonable price environment. So if we can’t deliver a project that makes money then we certainly can’t be the next producer. And I think the market will know that by—we would know if we failed based on the results on our PEA.

And the reality is if we can’t be that next producer, then we’re certainly well-positioned to continue to be a strong explorer. We have just under 400,000 hectares of ground in the eastern part of the basin and we certainly have a number of projects that we’ve worked each of the last few years that have generated some very interesting exploration targets. Very few companies have been active in the last few years in the eastern part of the basin and so we think we’ve got some of the best targets outside of Wheeler River to work as well. And that’s certainly where we would turn if it turned out that Wheeler River was not going to get the job as the next producing asset. But I tell you, I do feel pretty strongly that we’re going to be able to deliver on this promise.

Maurice Jackson:  Okay. And for the listeners, David, what makes you specifically qualified for the task at hand to make Denison Mines the next producer in the making?

David Cates:  Maurice, I mean my background is in finance. I’ve been with Denison 7-1/2 years at this stage. Worked within a lot of really top-notch guys along the way. Ron Hochstein is a mentor to me and he’s really brought me along in terms of understanding this uranium mining business. But I’ll tell you what, it’s not just about me, you know. It’s about our team and our team is extremely unique and skilled.

I’ll give you an example. Our VP of project development, Peter Longo, he’s based in Saskatoon where we have an office, essentially on Main Street and Saskatoon. And Pete has experienced working for AREVA in Saskatchewan for uranium projects. He’s a mine engineer in background and he’s developed mine plans for projects in the Athabasca basin and he’s actually worked in a remote gold operation as well in northern Saskatchewan.

So, here’s a guy who’s a true miner by background and he’s the guy who’s leading the charge when it comes to developing the economics and developing Wheeler River. You know, I have no doubt that Pete Longo will be with us through this first stage of scoping the economics all the way through to when we break ground on this project.

And Pete is not alone. We have a very skilled exploration team also based in Saskatoon. Our VPX, Dale Verran, has been with the company for a few years. He’s also quite seasoned when it comes to uranium exploration. And what I love about Dale is that Dale really understands that, you know, exploration is an art and it requires a certain degree of energy from the people and the motivation to deliver the best results. This is not, you know, a mechanical task of finding uranium in the ground. It’s really a creative task and I think the energy that Dale brings to our team is really, really quite important to where we’re headed and the discoveries that are ahead for us.

Maurice Jackson:  You know, I’m glad you mentioned your team because it truly is reflective in the results. I mean Denison Mines is just a phenomenal company and it’s proven by numbers, it’s proven by grade. It shows. So I’m glad you mentioned your team. What do you believe has been your biggest accomplishment at Denison Mines?

David Cates:  Well, I think Maurice, it’s a collection of a number of things because, you know, I’ve been—I was the CFO before I became the CEO and we’ve been involved in a transformation of this company. I wouldn’t want to pick one thing. I think what it is is, you know, being part of a transformation where we’ve gone from being a U.S producer with marginal assets that could not really do well enough in this low-priced environment we’ve been in with interest in Africa and Mongolia as well.

You know, what we’ve done in the last 3 or 4 years is transform a company with that profile into a company that now has a clear mission of being a large-scale producer in the Athabasca and we’ve done that by selling those U.S. assets. We’ve done that by sort of enhancing our African portfolio so that we can spin it out and we’ve also done it by consolidating other assets in the Athabasca basin in the east in particular. And then finally, most recently selling our Mongolia business.

So, it’s really a collection of work I think that I’m proud of that shows that we’ve really taken a strategic look at the entire uranium space and we’ve repositioned the company for exactly where we’re headed which is to make—I guess to be positioned to take advantage of a fundamental rise in the uranium price by having one of the best assets in the world as the next producing asset.

Maurice Jackson:  And kudus to you. I’ve watched the company evolve over the years and that’s why I’m so excited about Denison Mines. So, if you would as well, what do you believe has been your biggest shortcoming at Denison Mines?

David Cates:  You know, I think Denison’s biggest shortcoming has probably been the amount of time we spent marketing the company. I mean, Maurice, you’re so plugged in to us that you are familiar with it. I think through all this transition, what we probably could have done better is communicate with our shareholders and especially some of the retail shareholders out there. I think this discovery of the Gryphon deposit was really underappreciated by a good chunk of the market and really that’s partly on us for not banging the drum loud enough.

And to be quite honest, it’s been a difficult sector to be in. There’d been a number of other discoveries and there had been a number of other things that people could pay attention to. And I think to be honest, that’s been our largest shortcoming is that we just haven’t, you know, gone around telling people quite enough about our story for them to see how fantastic a company we’ve been building.

Maurice Jackson:  Fair enough. You know, David, I would be remiss if I didn’t discuss Fission Uranium. You know, the merger didn’t take place, but does that mean that there won’t be continued efforts to make the merger come to fruition?

David Cates:  Well, Maurice, I mean I never say never, but maybe it helps if I give some color about the merger and where we were coming from on the Denison side. You know, what we were really looking for with Fission was sort of a long-term asset that could really add value in the long run to our portfolio. You know, we really believed that Wheeler River is the project poised to be the next producing asset in the basin, and we saw Wheeler River as being the means to fund, you know, that frontier development in the western Athabasca with Fission and PLS.

And so, you know, we very much would have liked for that deal to happen but at the end of the day, it doesn’t really change our path. Our path is still Wheeler River being the next producing asset and what we’re out there looking for is that next long-term asset. And it doesn’t mean it couldn’t be PLS down the road. It could be PLS but, you know, at the same time, it could be something that we find on one of our properties in the east and make light of the transaction a little bit but, you know, if we do find that one of our assets in the east, it certainly would be a lot cheaper than the deal that we would have done with Fission.

Maurice Jackson:  Okay. And I know a lot of shareholders wanted to hear that response from you there, so thank you for sharing that. You know, Rick Rule, he’s the chairman of Sprott U.S. Holdings and he references that in the natural resource space, there are names that have a repute for being serially successful—Robert Friedland, Ross Beaty and Lukas Lundin. Now Mr. Lundin recently took a position on the Board of Directors. What prompted that decision?

David Cates:  Well, Maurice, so Lukas has been with Denison since the merger with International Uranium in 2006. You know, he served as a chairman of Denison for a number of years. He stepped aside as chairman earlier in 2015 and Ron Hochstein was promoted to that post. Lukas stayed on as a director, but following the merger that didn’t happen with Fission, we made a strategic decision for Lukas to become even more engaged with Denison. And then so he took the post of executive chairman.

And what I can tell you is that you’re 100% right about Lukas being a unique person in the mining space in having an unparalleled track record and we’re quite honored to have him serve as our executive chairman and to be accessible for the management team here. You know, Lukas is very plugged in with the Denison story. He’s following up with us on a regular basis about the progress we’re making on our corporate objectives and he’s bullish about uranium. He was bullish about uranium when we were involved in the merger and he’s still bullish about uranium now, and you can see that with where we’re trying to take the Wheeler River project and how we’re trying to build this company into being that next producer. That’s an idea that Lukas is fully behind. And like I said, we’re actually quite blessed to have Lukas wanting to be so engaged in our story.

Maurice Jackson:  Well, I can tell you I know a lot of shareholders are excited as well to have Mr. Lundin there take the position I should say. Who are the biggest institutional investors and how much did they or will they pay and when can they sell?

David Cates:  Well, Maurice, we hope they never sell. But our biggest institutional shareholders, you know, really there’s 2 to 3 groups of large shareholders out there. We have a group from Korea called KEPCO. This is the Korean utility, so they have a significant interest around 11% of Denison. We also have a company here in Canada called Beutel Goodman. That’s a fund that is invested in Denison. They’re a significant shareholder. And I think the third one is basically the Lundin family interests. So, between those 3 shareholders, you know, we really hope that none of them are looking to sell and from what we understand they’re all really in it for the long run on Denison and, you know, we’re actually quite happy to have all 3 of them be strong supporters for the company.

Maurice Jackson:  Okay. Finally, let’s discuss some numbers. Let’s talk about the balance sheet and shares, and the floor is yours here.

David Cates:  Yeah, sure. We’ve got just around 518 million shares outstanding. We’ve got a market cap in Canada in the 330 to 350 million dollar range right now. It’s historically low based on where we had been in the past. And again, that’s oil and gas connection that seems to be driving us down. Balance sheet-wise, you know, we’re funded for 2016. We raised money in the flow-through market in 2015. 15 million dollars Canadian that we raised in 2015 and that’s earmarked for 2016’s more exploration activities funded through 2016.

We’ve talked a little bit about cash flow. I think whenever we bring up the balance sheet, really critical to talk about the fact that we’ve got internal sources of cash flow. McClean Lake mill processing ore from the Cigar Lake mine, that’s going to generate 12 million in revenue for Denison this year. We have guided the market that we’re looking to be in the range of +6 million dollars a year and 12 million in revenues for the next several years, and that’s Denison share. No direct cost associated with that 12 million.

The Cigar Lake JVP is for the cost of operating the mill generally. But we also have cash flow coming from managing UPC, so you can add another 2 million dollars roughly a year to Denison’s account for managing UPC. And then we have an environmental services division. So, we do have a group of skilled environmental technicians and professionals that are based in Elliot Lake, Ontario. They provide environmental services to third parties and governments in Canada and they generate cash flow. We’re looking for them to generate somewhere in the range of 1 to 1.2 million dollars Canadian this year in cash flow and we’ll use those proceeds to pay some of our liabilities in Elliot Lake, but also to fund other parts of our business.

And so when you add that all up, you’ve got a development company that has a very unique profile because it has saved 8 to 10 million dollars in internally generated cash flow and that really just means to our shareholders that we are not having to go out and raise money to fund every dollar we spend. We’re really only raising money that will go directly into the ground in the form of, say, exploration or development dollars.

Maurice Jackson:  Okay. And with that being said, what is the current liquidation value of the company versus the market cap?

David Cates:  Well, market cap in that 330 to 350 range, you know, we’re trading at significant discounts to NAVs if we look at our analyst NAV estimates. You know, we may be in right now at 0.3 of NAV range. Analysts have easily had valuations in Denison in the 800 to a billion dollar range. So, quite a low level historically and if you’re a value investor, given the fundamentals in the uranium space, certainly not the worst time to be looking at investing.

Maurice Jackson:  Absolutely. And for the listeners, the ticker symbol on the New York Stock Exchange is DNN and on the Toronto Stock Exchange, it is DML. David, for listeners, if they wanted to get more information, who should they contact?

David Cates:  Well, Maurice, 2 things. They can certainly check out our website at denisonmines.com, but what I’d really love for them all to do is to join us on Twitter. We do have a Twitter handle @denisonminesco and we are regularly updating all of our shareholders on Twitter and it has proved to be a very effective way for people to stay plugged in with our story.

Maurice Jackson:  Well, thank you again for joining us today, Mr. Cates. It’s been an honor. It truly has.

David Cates:  Maurice, my pleasure as always. Thanks very much for being so plugged in.

Maurice Jackson:  You’re more than welcome. Let’s do it again in the near future.

David Cates:  Will do, Maurice.

Maurice Jackson:  Thank you.

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