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Immediately prior to the sale, the Company tested the U.S. Mining Division for impairment using the fair value of the EFR Share Consideration as the recoverable amount. The Company determined that the recoverable amount of the U.S. Mining Division was lower than its carrying value. As a result, the Company recognized an impairment charge of $97,944,000 in the year ended December 31, 2012.

As a result of the EFR Transaction, Denison has accounted for its U.S. Mining Division as a discontinued operation.

Liquidity & Capital Resources

Cash and cash equivalents were $38,188,000 at December 31, 2012 compared with $53,515,000 at December 31, 2011. The decrease of $15,327,000 was due primarily to cash used in operations of $6,769,000, and expenditures on property, plant and equipment totaling $13,122,000, offset by cash generated from financing activities totaling $6,560,000.

Net cash used in operating activities of $6,769,000, during the year ended December 31, 2012, 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 an increase of $14,025,000 in inventories, prior to the disposal of the U.S. Mining Division, and a decrease of $9,449,000 in trade and other receivables.

Net cash used in investing activities was $16,043,000 consisting primarily of expenditures on property, plant and equipment of $13,122,000 and investment purchases of $1,816,000.

Net cash provided by financing activities of $6,560,000 relates primarily to the issuance of flow-through common shares for proceeds, net of issuance costs, of $6,556,000.

In total, these sources and uses of cash resulted in a net cash outflow after the effect of foreign exchange of $15,327,000 in the year.

The Company has in place a revolving credit facility for up to $15,000,000. The facility expires on June 28, 2013. Bank indebtedness under the facility at December 31, 2012 was nil; however, $9,748,000 of the line is used as collateral for certain letters of credit. As part of the credit facility, the Company has provided an unlimited full recourse guarantee and a pledge of all of the shares of Denison Mines Inc.

Subsequent Events

On January 16, 2013, Denison announced the signing of a Binding Letter of Intent to acquire a portfolio of assets from Fission Energy Corp. ("Fission") which include its 60% interest in the Waterbury Lake uranium project, its interests in all other properties in the eastern part of the Athabasca Basin, Quebec and Nunavut and its interests in two joint ventures in Namibia (collectively, the "Assets"). Denison entered into an arrangement agreement with Fission on March 7, 2013 (the "Fission Arrangement"). Under the terms of the Fission Arrangement, Denison will offer shareholders of Fission 0.355 of a share of Denison for each Fission share held. The completion of the transaction is conditional upon, among other things, certain assets of Fission being spun out to a new company. Denison expects to issue approximately 49,200,000 common shares to complete the acquisition, which values the Assets at approximately CAD$62,500,000 based on Denison's closing share price of CAD$1.27 per share on March 6, 2013.

On January 31, 2013, Denison closed its previously announced plan of arrangement (the "JNR Arrangement") to acquire all of the outstanding common shares of JNR. Pursuant to the JNR Arrangement, the former shareholders of JNR received, for each JNR common share held, 0.073 of a Denison common share (the "Exchange Ratio"). All of the outstanding options and common share purchase warrants of JNR were exchanged for options and warrants to purchase common shares of Denison with a number and exercise price determined by reference to the Exchange Ratio. On closing, Denison issued 7,975,479 common shares with a value of approximately CAD$10,900,000.