DML.TO · 2011-05-11

Denison Mines Corp. Reports First Quarter 2011 Results

Financials

Atrium on Bay, 595 Bay Street, Suite 402 Toronto, ON M5G 2C2 www.denisonmines.com Ph. 416-979-1991 • Fx. 416-979-5893 •

PRESS RELEASE Trading symbols: DML-T, DNN-A

DENISON MINES CORP. REPORTS FIRST QUARTER 2011 RESULTS

Toronto, ON – May 11, 2011… Denison Mines Corp. (“Denison” or the “Company”) (DML: TSX, DNN: NYSE AMEX) today reported its financial results for the three months ended March 31, 2011. All amounts in this release are in U.S. dollars unless otherwise indicated. For a more detailed discussion of the Company’s financial results, see management’s discussion and analysis (“MD&A”), a copy of which is attached to this release.

Financial Highlights

� Revenue was $26.8 million for the three months ended March 31, 2011.

� Net loss was $7.1 million ($0.02 per share) for the three months ended March 31, 2011.

� Cash flow from operations was $4.7 million for the three months ended March 31, 2011.

� The Company issued 18.3 million common shares for gross proceeds of $66 million.

Operating Highlights

� Denison’s production for the quarter totaled 340,000 pounds U3O8 and 413,000 V2O5 .

� Uranium sales were 267,000 pounds U3O8 at an average price of $63.26 per pound.

� Vanadium sales totaled 856,000 pounds V2O5 equivalent at an average price of $6.20 per pound.

� The 2011 winter program on the 60% owned Wheeler River property identified opportunities for expanding the existing estimates of the mineral resources in Zone A and further expanded the favourable stratigraphy.

� The Company announced an off-market take-over bid for White Canyon Uranium Limited.

� In March, Denison received an updated resource estimate prepared by Roscoe Postle Associates, Inc., in accordance with National Instrument 43-101 (“NI43-101”) for its Hairhan deposit held by the Gurvan Saihan Joint Venture (“GSJV”) in Mongolia. The updated resource estimate on a 100% basis increased the indicated resources to 19,780,000 pounds U3O8 and the inferred resources to 5,811,000 pounds U3O8 using a cut-off of 0.02%U (0.024% U3O8) over a minimum thickness of 2 metres. Denison owns 70% of the GSJV.

International Financial Reporting Standards

We have prepared our first quarter 2011 interim consolidated financial statements and other financial information using International Financial Reporting Standards (“IFRS”) and restated our 2010 comparative financial statements and other financial information following our IFRS accounting policies.

Revenue

Uranium sales revenue for the first quarter 2011 was $16,870,000. Sales were 267,000 pounds U3O8 at an average price of $63.26 per pound. Uranium sales revenue in the first quarter of 2010 totaled $15,009,000. Sales were 267,000 pounds U3O8 at an average price of $56.28 per pound.

Vanadium sales revenue was $5,579,000 for the first quarter of 2011. Sales were 856,000 pounds of V2O5 equivalent at an average price of $6.20. During the three months ended March 31, 2010, the Company sold 284,000 pounds of V2O5 equivalent at an average price of $5.82 per pound. Total vanadium sales revenue was $1,917,000.

Revenue from Denison’s environmental services division was $3,484,000 for the three months ended March 31, 2011 compared to $3,684,000 in the comparable 2010 period. Revenue from the management contract with Uranium Participation Corporation was $551,000 for the three months ended March 31, 2011 compared to $1,302,000 in the same period in 2010. The decrease is due to transaction fees received in the first quarter of 2010.

Operating Expenses

The McClean Lake mill is on stand-by and there was no production during the quarter. Operating costs for the quarter were $143,000 including stand-by costs.

At the White Mesa mill, production during the first quarter totaled 340,000 pounds U3O8 and 413,000 pounds V2O5.

At March 31, 2011, a total of 52,000 tons of conventional ore was stockpiled at the mill containing approximately 271,000 pounds U3O8 and 676,000 pounds V2O5. The Company also has approximately 468,000 pounds U3O8 contained in the alternate feed material stockpiled at the mill at March 31, 2011.

U.S. production costs¹ for the three months ended March 31, 2011 were $50.18 per pound U3O8. Production costs were $53.56 per pound U3O8 in the three months ended March 31, 2010.

Inventory available for sale from U.S. production was 228,000 pounds U3O8 and 240,000 pounds V2O5 and 2,000 pounds FeV at March 31, 2011.

Other

Operating costs for the three months ended March 31, 2011 include a provision of $868,000 (2010 – a recovery of $7,264,000) relating to the net realizable value of the Company’s uranium and vanadium inventory. Operating expenses also include costs relating to Denison’s environmental services division amounting to $3,410,000 in the three month period ended March 31, 2011 and $3,416,000 in the comparable period in 2010.

Mineral Property Exploration

Denison is engaged in uranium exploration, as both operator and non-operator of joint ventures and as operator of its own properties in Canada, the U.S., Mongolia and Zambia. For the three months ended March 31, 2011 exploration expenditures totaled $3,185,000 compared to $1,697,000 for the three months ended March 31, 2010.

A majority of the exploration expenditures during the period were spent in the Athabasca Basin region of northern Saskatchewan. During the quarter, Denison engaged in uranium exploration as part of the McClean and Wolly joint ventures operated by AREVA Resources Canada Inc. (“ARC”), as well as on 4 other exploration projects including the Company’s 60% owned Wheeler River project. Denison’s share of exploration spending on its Canadian properties totaled $2,688,000. For the three months ended March 31, 2010, Canadian exploration expense totaled $1,416,000.

The 2011 winter drilling program at the Phoenix uranium deposit on the 60% owned Wheeler River property consisted of a total of 30 holes for 14,551 metres, with the major focus being directed to defining the favourable stratigraphy along strike from the known mineralization in Zones A and B. The program identified opportunities for expanding the existing estimates of the mineral resources in Zone A and further expanded the favourable stratigraphy which will be followed up this summer.

White Canyon Acquisition

The Company is in the process of an off-market takeover (the “Offer”) for White Canyon Uranium Limited (“White Canyon”), an Australian Stock Exchange listed company. The Offer is conditional upon receiving acceptances in respect of 90% of White Canyon shares. To date, the Offer remains open and the Company has received acceptances in respect of 65% of White Canyon shares.

Liquidity

The Company had cash and cash equivalents of $158,706,000 at March 31, 2011. The Company has in place a revolving credit facility of $60,000,000. The facility expires on June 30, 2011. Bank indebtedness under the facility at March 31, 2011 was nil; however, $22,048,000 of the line is used as collateral for certain letters of credit.

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

Outlook for 2011

Denison's uranium production is expected to total 1.2 million pounds of U3O8 from ore in stockpile and from the Beaver, Pandora and Arizona 1 mines and production from the alternate feed circuit at the White Mesa Mill in the United States. Vanadium production is now expected to be 1.7 million pounds of V2O5. The reduction from the Company’s projection of 2.2 million pounds is due to lower head grade, lower recoveries and some process issues experienced in the first quarter.

Uranium sales are forecasted to be approximately 1.3 million pounds of U3O8 of which just over 500,000 pounds will be sold into long term contracts and the remainder will be sold on the spot market. Vanadium sales are now projected to be about 2.1 million pounds V2O5 in 2011. The decline in sales is due to lower production expectations and production timing being later in the year.

Conference Call

Denison is hosting a conference call on Thursday, May 12, 2011 starting at 8:00 A.M. (Toronto time) to discuss the first quarter 2011 results. The webcast will be available live through a link on Denison’s website www.denisonmines.com and by telephone at 416-340-2216. A recorded version of the conference call will be available by calling 905-694-9451 (password: 2461552) approximately two hours after the conclusion of the call. The presentation will also be available at www.denisonmines.com.

Additional Information

Additional information on Denison is available on SEDAR at www.sedar.com and on the Company’s website at www.denisonmines.com.

About Denison

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

For further information contact:

Ron Hochstein (416) 979-1991 Extension 232 President and Chief Executive Officer

James R. Anderson (416) 979-1991 Extension 372 Executive Vice President and Chief Financial Officer

Cautionary Statements

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

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

Forward looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Denison to be materially different from those expressed or implied by such forward-looking statements. Denison believes that the expectations reflected in this forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information included in this press release should not be unduly relied upon. This information speaks only as of the date of this press release. In particular, this press release may contain forward-looking information pertaining to the following: the estimates of Denison's mineral reserves and mineral resources; estimates regarding Denison’s uranium and vanadium production levels and sales volumes; capital expenditure programs, estimated production costs, exploration and development expenditures and reclamation costs; expectations of market prices and costs; supply and demand for uranium and vanadium; possible impacts of litigation and regulatory actions on Denison; exploration, development and expansion plans and objectives; Denison's expectations regarding raising capital and adding to its

mineral reserves and resources through acquisitions and development; and receipt of regulatory approvals, permits and licences and treatment under governmental regulatory regimes.

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

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

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This press release may use the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

Qualified Person

The disclosure of scientific and technical information regarding Denison’s properties in this press release was prepared by or under the supervision of William C. Kerr, the Company’s Vice-President, Exploration and Terry Wetz, Director of Project Development who are Qualified Persons in accordance with the requirements of National Instrument 43-101.

INTRODUCTION

This Management’s Discussion and Analysis (“MD&A”) of Denison Mines Corp. and its subsidiary companies and joint ventures (collectively, “Denison” or the “Company”) provides a detailed analysis of the Company’s business and compares its financial results with those of the previous year. This MD&A is dated as of May 11, 2011 and should be read in conjunction with, and is qualified by, the Company’s unaudited interim consolidated financial statements and related notes for the three months ended March 31, 2011. The interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). 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 its filings with the securities regulatory authorities in Canada at www.sedar.com and the United States at www.sec.gov/edgar.shtml.

ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS

Our first quarter 2011 interim consolidated financial statements and other financial information have been prepared using IFRS. The Company has restated its 2010 comparative financial statements and other financial information following its IFRS accounting policies.

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.

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

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

expressly qualified by this cautionary statement. Denison does not undertake any obligation to publicly update or revise any forward-looking information after the date of this 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 Resources: “This MD&A” may use the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.

Overview

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

Denison is an intermediate uranium producer with production in the U.S. combined with a diversified development portfolio with projects in the U.S., Canada, Zambia and Mongolia. Denison’s assets include its 100% ownership of the White Mesa mill in Utah and its 22.5% ownership of the McClean Lake mill in Saskatchewan. The Company also produces vanadium as a co-product from some of its mines in Colorado and Utah. The Company is also in the business of processing uranium-bearing waste materials, referred to as “alternate feed materials”, for the recovery of uranium, alone or in combination with other metals, at the Company’s White Mesa mill.

Denison owns interests in a portfolio of exploration projects, including the Wheeler River property, along with other properties in the Athabasca Basin in Saskatchewan and in the Colorado Plateau, Henry Mountains and Arizona Strip regions of the southwestern United States in close proximity to the Company’s mills.

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

SELECTED QUARTERLY FINANCIAL INFORMATION

The following selected financial information was obtained directly from or calculated using the Company’s consolidated financial statements for the three months ended March 31, 2011 and 2010.

Three Months Three Months ended ended (in thousands)

March 31 March 31 2011 2010

Results of Operations:

Total revenues	$ 26,768 $	21,975
Net income (loss)	(7,067)	(7,179)
Basic earnings (loss) per share	(0.02)	(0.02)
Diluted earnings (loss) per share	(0.02)	(0.02)

As at March 31, As at December 31, 2011 2010

Financial Position:

Working capital	$	187,487 $	133,837
Long-term investments		1,481	2,955
Property, plant and equipment		352,465	342,164
Total assets		587,479	523,003
Total long-term liabilities	$	38,848 $	38,598

RESULTS OF OPERATIONS

General

The Company recorded a net loss of $7,067,000 ($0.02 per share) for the 2011 period compared with net loss of $7,179,000 ($0.02 per share) for the 2010 period.

Revenues

Uranium sales revenue for the quarter was $16,870,000 from the sale of 267,000 pounds U3O8 at an average price of $63.26 per pound. Uranium sales for the same period in 2010 were 267,000 pounds U3O8 at an average price of $56.28 per pound resulting in revenue of $15,009,000.

During the quarter the Company sold 856,000 pounds of V2O5 equivalent at an average price of $6.20 per pound. In the first quarter of 2010, the Company sold 284,000 pounds of V2O5 equivalent at an average price of $5.82 per pound. Total vanadium sales revenue for the first quarter 2011 was $5,579,000 compared to $1,917,000 in the first quarter of 2010.

Revenue from the environmental services division for the three months ended March 31, 2011 was $3,484,000 compared to $3,684,000 in the same period in 2010. Revenue from the management contract with UPC for the three months ended March 31, 2011 was $551,000 compared to $1,302,000 in the same period in 2010. The decrease is due to transaction fees received in the first quarter of 2010.

Operating Expenses

Milling and Mining Expenses

The McClean Lake mill is on stand-by and there was no production during the first quarter. Operating costs for the period totaled $143,000 including stand-by costs.

At the White Mesa mill, uranium production during the quarter totaled 340,000 pounds U3O8 and 413,000 pounds V2O5. compared to 108,000 pounds U3O8 and nil V2O5 for the three months ended March 31, 2010.

At March 31, 2011, a total of 52,000 tons of conventional ore was stockpiled at the mill containing approximately 271,000 pounds U3O8 and 676,000 pounds V2O5. The Company also had approximately 468,000 pounds U3O8 contained in alternate feed material stockpiled at the mill at March 31, 2011.

Production costs¹ at White Mesa for the three months ended March 31, 2011 were $50.18 per pound U3O8. Production costs were $53.56 per pound U3O8 in the three months ended March 31, 2010.

Inventory available for sale from U.S. production was 228,000 pounds U3O8, 240,000 pounds V2O5 and 2,000 pounds FeV at March 31, 2011.

On November 16, 2009, as amended on February 1, 2010, the Center for Biological Diversity, Grand Canyon Trust, Sierra Club, Kaibab Band of Paiute Indians and Havasupai Tribe (the “Plaintiffs”) filed a lawsuit against the U.S. Secretary of the Interior and the U.S. Bureau of Land Management (“BLM”) (together, the “Defendants”) seeking an order declaring that the Defendants have violated environmental laws in relation to the Company’s Arizona 1 mine, by not requiring a new Plan of Operations in connection with the start of mining activities. The Plaintiffs are also claiming that, if a new Plan of Operations is not required, the Defendants failed to conduct a review of potential environmental impacts from the mine since the existing Plan of Operations for the mine was approved by BLM in 1988. The Plaintiffs further claim that all required permits have not been obtained for the mine under the Clean Air Act, and that, as a result, BLM failed to take all actions necessary to prevent unnecessary degradation of the public lands. The Plaintiffs are seeking an order declaring that the Defendants have violated these environmental laws in relation to the Arizona 1 mine, and an injunction directing operations to cease and stopping the Defendants from authorizing or allowing any further mining or exploration operations at the Arizona 1 mine until BLM complies with all applicable laws. On February 8, 2010 the Defendants filed an Answer to the Plaintiffs’ complaint denying the

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

foregoing allegations. Denison has been added as an intervener in this lawsuit, and believes that each of these allegations is without legal merit; is not supported by the administrative record; and should be dismissed.

On April 19, 2010, Plaintiffs filed a motion for a preliminary injunction to shut down operations at the mine pending a decision on the merits of the case. A hearing on the motion for an injunction was held on June 11, 2010, and on June 17, 2010 the judge denied the Plaintiffs’ request for preliminary injunctive relief. On July 12, 2010, the Plaintiffs appealed the ruling on the preliminary injunction to the Ninth Circuit Court of Appeals, and on July 14, 2010 filed another motion for preliminary injunction, pending appeal. That motion was denied by the judge on August 11, 2010. On August 16, 2010 the Plaintiff’s filed an emergency motion for an injunction pending appeal in the Court of Appeals. On August 31, 2010, a two-judge panel denied that motion. The appeal to the Court of Appeals of the district judge’s original ruling denying the preliminary injunction was heard on January 14, 2011, and a decision denying the appeal was issued on May 6, 2011. The original case is ongoing, and the hearing on the merits is scheduled for May 20, 2011. If the Plaintiffs are successful on the merits, the Company may be required to stop mining activities at the Arizona 1 mine pending resolution of this matter. Any required stoppage of mining could have a significant adverse impact on the Company.

In August 2009, the Arizona Department of Environmental Quality (“ADEQ”) issued an air quality permit that authorized the restart and operation of the Arizona 1 mine. Despite this authorization by ADEQ and a previous authorization of construction and operation of the mine by the United States Environmental Protection Agency (“EPA”) in 1988, EPA alleged that a new EPA approval was required at that time, notwithstanding the ADEQ permit. On May 3, 2010, EPA issued a Finding of Violation to Denison alleging non-compliance with the provisions of the Clean Air Act for not obtaining the second EPA approval and associated matters. EPA withdrew its Finding of Violation on April 8, 2011.

On July 29, 2010, Uranium Watch, Living Rivers and Center for Water Advocacy (the “Pandora Plaintiffs”) filed a lawsuit against the U.S. Forest Service (“USFS”) and the Forest Supervisor for the Manti-La Sal National Forest (together, the “Pandora Defendants”) seeking an order declaring that the Pandora Defendants have violated environmental laws in relation to the Company’s Pandora mine, by not requiring an Environmental Assessment or Environmental Impact Statement under the National Environmental Policy Act (“NEPA”) in connection with the USFS’s approval of Plans of Operation authorizing the Company to construct two vent holes and drill 16 uranium exploration holes at the mine. The Pandora Plaintiffs sought an order declaring that the Pandora Defendants have violated NEPA and vacating the USFS’ approval of the Plans of Operation for these two projects, and enjoining the USFS from allowing the projects to proceed pending full compliance with the law. The Pandora Plaintiffs also filed a motion for a temporary restraining order and preliminary injunction against the commencement of the projects. Denison was added as an intervener in this lawsuit. A hearing on the motion for a preliminary injunction was held on September 2, 2010, and on September 14, 2010 the judge denied the Pandora Plaintiff’s request for preliminary injunctive relief. This matter has now been settled, with no impacts of any significance on the Company.

On August 17, 2010, EPA issued a Notice of Violation under the Clean Air Act, citing four violations of the National Emission Standards for Hazardous Air Pollutants for underground uranium mines, relating to operations at Denison’s La Sal mines complex in Utah in 2009. Those violations were for alleged failure to obtain prior approval from EPA for the radon monitoring method used at the site, for some gaps in data collection and reporting, and for allegedly exceeding the emission standards at certain receptors using the prescribed air dispersion model. Denison has applied to EPA for approval to continue to use the radon monitoring method at the site, which is the same method used historically by the uranium mining industry. Similarly Denison does not believe the prescribed air dispersion model is sophisticated enough to accurately calculate potential doses from radon to nearby receptors at the La Sal mines, given the complex terrain and other factors at the site, and has applied to EPA for approval to use a more sophisticated air dispersion model. EPA and Denison are currently in discussions to settle this administrative action, which may involve the payment of a stipulated penalty which is not expected to be material.

Other

Operating costs for the three months ended March 31, 2011 include a provision of $868,000 relating to the change in net realizable value on the Company’s vanadium inventory. For the three months ended March 31, 2010 operating costs include a recovery of $7,264,000 relating to the change in net realizable value provisions of the Company’s uranium and vanadium inventory. Operating costs also include expenses relating to DES amounting to $3,410,000 for the three months in 2011 compared to $3,416,000 for the same period in 2010.

Mineral Property Exploration

Denison is engaged in uranium exploration, as both operator and non-operator of joint ventures and as operator of its own properties in Canada, the U.S., Mongolia and Zambia. For the three months ended March 31, 2011 exploration expenditures totaled $3,185,000 as compared to $1,697,000 for the three months ended March 31, 2010.

A majority of the exploration expenditures during the 2011 period were spent in the Athabasca Basin region of northern Saskatchewan. During the quarter, Denison engaged in uranium exploration as part of the AREVA Resources Canada Inc. (“ARC”) operated McClean and Wolly joint ventures, as well as on 4 other exploration projects including the Company’s 60% owned Wheeler River project. Denison’s share of exploration spending on its Canadian properties totaled $2,730,000 for the three months ended March 31, 2011. For the three months ended March 31, 2010, Canadian exploration spending totaled $1,416,000. The 2011 winter drilling program on Wheeler River consisted of a total of 30 holes for 14,551 metres, with the major focus being directed to defining the favourable stratigraphy along strike from the known mineralization in Zones A and B. The program identified opportunities for expanding the existing estimates of the mineral resources in Zone A and further expanded the favourable stratigraphy.

Exploration expenditures of $305,000 for the three months ended March 31, 2011 ($278,000 for the three months ended March 31, 2010) were incurred in Mongolia on the Company’s joint venture properties. The Company has a 70% interest in the Gurvan Saihan Joint Venture (“GSJV”) in Mongolia. The other parties to the joint venture are the Mongolian government as to 15% and Geologorazvedka, a Russian entity, as to 15%. Under the Nuclear Energy Law, the Government of Mongolia could acquire a 34% to 51% interest at no cost to the Government. In October, the Company and Mon-Atom, the Mongolian state owned uranium company and partner in the GSJV, signed a Memorandum of Understanding (“MOU”). The purpose of the MOU is to establish a co-operative arrangement with Mon-Atom to address the ownership issue in the context of existing agreements between the GSJV and the Government of Mongolia and the Nuclear Energy Law and to establish the basis for negotiation of an Investment Agreement. Discussions are underway with the Mongolian Government.

Exploration expenditures of $114,000 and $36,000 for the three months ended March 31, 2011 were made on the Company’s Mutanga project in Zambia and on its properties in the United States, primarily in the Colorado Plateau, respectively.

General and Administrative

General and administrative expenses totaled $4,378,000 for the three months ended March 31, 2011 compared with $3,650,000 for the three months ended March 31, 2010. General and administrative expenses consist primarily of payroll and related expenses for personnel, contract and professional services, stock option expense and other overhead expenditures. The increased expenditures in 2011 result from an increase in acquisition costs related to the White Canyon take-over bid.

Other Expenses

Other expense totaled $1,991,000 for the three months ended March 31, 2011 compared with $6,116,000 for the three months ended March 31, 2010. This consists primarily of foreign exchange losses and investment disposal gains. Foreign exchange losses totaled $2,567,000 for the three months ended March 31, 2011 compared to $6,263,000 for the three months ended March 31, 2010.

OUTLOOK FOR 2011

SUMMARY OF QUARTERLY FINANCIAL RESULTS

	2011	2010	2010	2010
(in thousands)	Q1(1)	Q4(1)	Q3(1)	Q2(1)
Total revenues	$ 26,768	$ 39,232	$ 39,883	$ 27,230
Net income (loss)	(7,067)	(9,394)	(5,517)	16,744

Basic and diluted earnings (loss)

per share	(0.02)	(0.03)	(0.02)	0.05
	2010	2009	2009	2009
(in thousands)	Q1(1)	Q4(2)	Q3(2)	Q2(2)
Total revenues	$ 21,975	$ 31,052	$ 12,748	$ 13,372
Net income (loss)	(7,179)	(36,127)	(91,343)	(18,215)

Basic and diluted earnings (loss)

per share (0.02) (0.11) (0.27) (0.07)

(1) These amounts have been prepared under IFRS.

(2) These amounts have been prepared under Canadian GAAP.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $158,706,000 at March 31, 2011 compared with $97,554,000 at December 31, 2010. The increase of $61,152,000 was due primarily to cash provided by operations of $4,664,000, new common share issues totaling $62,494,000 and less expenditures on property, plant and equipment totalling $6,266,000.

Net cash provided by operating activities of $4,664,000 during the three months ended March 31, 2011 is comprised of net loss for the period adjusted for non-cash items and for changes in working capital items. Significant changes in working capital items during the period include a decrease in accounts payable and accrued liabilities of $879,000, an increase of $11,286,000 in inventories and a decrease of $11,164,000 in trade and other receivables.

Net cash used in investing activities was $8,439,000 consisting primarily of expenditures on property, plant and equipment of $6,266,000 and an increase in restricted cash of $2,989,000.

Net cash from financing activities totaled $62,377,000 consisting of $62,494,000 from the issue of common shares less $117,000 repayment of debt obligations.

In total, these sources and uses of cash resulted in a net cash inflow after the effect of foreign exchange of $61,152,000 during the period.

The Company has in place a $60,000,000 revolving term credit facility (“the credit facility”). The credit facility contains three financial covenants, one based on maintaining a certain level of tangible net worth, which must be greater than or equal to the sum of $665,000,000 plus an amount equal to (i) 50% of each equity issue after September 30, 2009 and 50% of positive Net Income in each fiscal quarter from September 30, 2009, the second requiring a minimum current ratio of 1.10 to 1 and the other requires the Company to reduce the borrowing facility to $35,000,000 for a period of time each quarter before drawing further amounts. During the quarter, the Bank provided a waiver for any default which may occur on account of the Company being unable to satisfy a covenant in the credit facility relating to its tangible net worth due to adjustments occurring upon its adoption of IFRS. The credit facility terminates on June 30, 2011. There is no debt outstanding under this facility; however $22,048,000 of the line was used as collateral for certain letters of credit at March 31, 2011. Discussions are currently underway for a replacement facility.

The borrower under the facility is DMI and the Company has provided an unlimited full recourse guarantee and a pledge of all of the shares of 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. In addition, each of the Company’s material US subsidiaries has provided an unlimited full

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recourse guarantee secured by a pledge of all of its shares and a first-priority security interest in all of its present and future personal property. The credit facility is subject to a standby fee of 100 basis points.

OFF-BALANCE SHEET ARRANGEMENTS

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

TRANSACTIONS WITH RELATED PARTIES

The Company is a party to a management services agreement with UPC. Under the terms of the agreement, the Company will receive the following fees from UPC: a) a commission of 1.5% of the gross value of any purchases or sales of uranium completed at the request of the Board of Directors of UPC; b) a minimum annual management fee of CDN$400,000 (plus reasonable out-of-pocket expenses) plus an additional fee of 0.3% per annum based upon UPC’s net asset value between CDN$100,000,000 and CDN$200,000,000 and 0.2% per annum based upon UPC’s net asset value in excess of CDN$200,000,000; c) a fee of CDN$200,000 upon the completion of each equity financing where proceeds to UPC exceed CDN$20,000,000; d) a fee of CDN$200,000 for each transaction or arrangement (other than the purchase or sale of uranium) of business where the gross value of such transaction exceeds CDN$20,000,000 (“an initiative”); e) an annual fee up to a maximum of CDN$200,000, at the discretion of the Board of Directors of UPC, for on-going maintenance or work associated with an initiative; and f) a fee equal to 1.5% of the gross value of any uranium held by UPC prior to the completion of any acquisition of at least 90% of the common shares of UPC.

The following transactions were incurred with UPC for the periods noted below:

Three Three Months Months Ended Ended March 31, March 31, (in thousands) 2011 2010 Revenue

Management fees	$	551	$	340
Commission and transaction fees		–		962
Total	$	551	$ 1,302

At March 31, 2011, accounts receivable includes $192,000 (2010 - $149,000) due from UPC with respect to the fees indicated above.

On November 18, 2010, the Company entered into a uranium concentrate loan agreement with UPC which entitled the Company to borrow 150,000 pounds of U3O8 from UPC. The U3O8 loan was subject to a loan fee and required collateral in the form of an irrevocable standby letter of credit. The uranium loaned was to be repaid by February 3, 2011 or a later date agreed to by both parties. On December 24, 2010, the Company issued a letter of credit in favour of UPC in the amount of $10,065,000 as collateral for the U3O8 loan. On January 3, 2011, the Company borrowed 150,000 pounds of U3O8 from UPC. On February 3, 2011, the repayment date for the U3O8 loan was amended to April 4, 2011 and the letter of credit was increased to $12,045,000. The uranium loaned was returned on March 30, 2011.

The Company has incurred management and administrative service fees of $31,000 (2010:$21,000) with a company owned by the Chairman of the Company which provides corporate development, office premises, secretarial and other services.

Korea Electric Power Corporation (“KEPCO”)

In June 2009, Denison completed definitive agreements with KEPCO. The agreements included a long-term offtake agreement which provides for the delivery to KEPCO of 20% of Denison’s annual U3O8 production (±10%) but not less than 350,000 pounds (±10%) per year from 2010 to 2015 inclusive. KEPCO also purchased 58,000,000 common shares of Denison representing approximately 17% of the issued and outstanding capital as at the June

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2009 share purchase. Pursuant to a strategic relationship agreement, KEPCO is entitled to subscribe for additional common shares in Denison’s future share offerings. KEPCO also has the right to require Denison to nominate two persons designated by KEPCO to Denison’s board of directors if KEPCO holds at least a 15% share interest in Denison (or one director if KEPCO’s share interest is between 5% and 15%). Currently, KEPCO’s share interest in Denison is approximately 15.08%.

OUTSTANDING SHARE DATA

At May 11, 2011, there were 384,660,915 common shares issued and outstanding and 7,897,514 stock options outstanding for a total of 392,558,429 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 Company’s first fiscal quarter of 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

NEW ACCOUNTING PRONOUNCEMENTS

Financial Instruments

IFRS 7, Financial Instruments – Disclosure was amended to require additional disclosure in respect of risk exposures arising from transferred financial assets. This amendment is effective for annual periods beginning on or after July 1, 2011. The Company is currently evaluating the impact of IFRS 7 amendment.

In October 2010, the IASB issued IFRS 9, Financial Instruments (IFRS 9). This standard is effective for periods beginning on or after January 1, 2013 and is part of a wider project to replace IAS 39. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value. The basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. The guidance in IAS 39 on impairment of financial assets continues to apply. We are assessing the impact of this new standard on our financial statements.

International Financial Reporting Standards (IFRS)

Our IFRS implementation plan is substantially complete. Effective January 1, 2011, we adopted IFRS for Canadian publicly accountable enterprises. Our interim financial statements for the first quarter of 2011 have been prepared in accordance with IFRS including comparative amounts for 2010. Details of the accounting differences can be found in note 4 to our interim financial statements.

Although IFRS has a conceptual framework that is similar to previous Canadian GAAP, there are significant differences in recognition, measurement and disclosure. The transition to the IFRS framework has resulted in several changes to our accounting policies that impact our financial reporting. The following are the more significant accounting differences:

Impairment of Non Current Assets Under Canadian GAAP, long-lived asset impairment testing is done using a two-step approach whereby long-lived assets are first tested for recoverability based on the undiscounted cash flows they are expected to generate. If the undiscounted cash flow expected to be generated is higher than the carrying amount, then no impairment charge is required to be recorded. If the undiscounted cash flow is lower than the carrying amount of the assets, the assets are written down to their estimated fair value. Under IFRS, impairment testing is done using a one-step approach for both testing and measurement of impairment, with asset carrying amounts compared directly with the higher of fair value less costs to sell and value in use. This may result in more frequent write-downs where carrying amounts of assets were previously supported under Canadian GAAP on an undiscounted cash flow basis, but could not be

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