Denison Mines Corp. (“Denison” or the “Company”) (DML: TSX, DNN: NYSE MKT) today filed its Unaudited Consolidated Financial Statements and Management’s Discussion & Analysis (“MD&A”) for the quarter ended June 30, 2019. Both documents can be found on the Company’s website at www.denisonmines.com or on SEDAR (at www.sedar.com) and EDGAR (at www.sec.gov/edgar.shtml). The highlights provided below are derived from these documents and should be read in conjunction with them. All amounts in this release are in Canadian dollars unless otherwise stated.
David Cates, President and CEO of Denison commented, “Through the summer months of 2019, Denison has remained focused on advancing its environmental assessment and feasibility study related efforts at Wheeler River. More broadly, within the uranium industry, a significant cloud of uncertainty was lifted when the Trump Administration declined to impose any trade restrictions on foreign uranium following a year-plus process to review a trade petition launched in the United Statesunder Section 232 of the Trade Expansion Act of 1962.
During the second quarter, Denison marked the completion of the first formal step to commence the environmental impact assessment process, under both federal and provincial regimes, with the acceptance of the Company’s Provincial Technical Proposal and Federal Project Description for an In-situ Recovery (‘ISR’) mining operation at the Company’s Wheeler River Uranium Project. Field activities at Wheeler River ramped up through the end of the second quarter, and continue through the third quarter, with the launch of a first of its kind ISR Field Test in the Athabasca Basin. At the Phoenix deposit, we have now successfully completed the large majority of well installations planned for the summer ISR field test and we are transitioning our activities to carry out a variety of hydrogeological tests, designed to evaluate the ISR mining conditions – a critical step in de-risking the application of ISR mining outlined in the project’s Pre-Feasibility Study completed in late 2018. Establishing hydraulic connections between test wells, as part of the field test, will provide meaningful validation for the selection of ISR and take us an important step closer to bringing the world’s lowest-cost mining method for uranium (ISR) to the jurisdiction hosting the world’s highest grade uranium deposits (the Athabasca Basin).
From an industry perspective, we are pleased with the Trump Administration’s decision related to the 232 petition. This represents the completion of a lengthy review process, spurred by the filing of a trade petition in early 2018 seeking a quota to require US utilities to buy from American uranium producers. The variety of possible risks created by this process weighed on the uranium market for months, creating uncertainty amongst utility fuel buyers in the United States and globally. Denison believes in the importance of a free market and is opposed to any trade measures that would artificially increase the cost of uranium to US nuclear utilities, and thus make nuclear energy comparatively less competitive against other sources of energy. With the expected cost profile of our Wheeler River ISR operation, we are well positioned to compete with uranium producers from around the world to meet the growing future requirements of nuclear utilities.”
- Commencement of ISR Field Testing at Wheeler River
During June 2019, the Company announced the commencement of ISR field testing, as part of an active summer 2019 field program planned for the Company’s 90% owned Wheeler River Uranium Project in northern Saskatchewan, Canada. The ISR field test program is designed to collect an extensive database of hydrogeological data from the Phoenix deposit. The data will be used to evaluate the ISR mining conditions present at the deposit, and is expected to be incorporated into a detailed ISR mine plan, as part of the completion of a Feasibility Study (‘FS’) for the project. Other key components of the summer 2019 field program include the continuation and expansion of the collection of certain environmental baseline data to support the Environmental Impact Assessment (‘EIA’), and an exploration drilling program focused on the follow-up and expansion of unconformity-hosted uranium mineralization intersected along the K-West trend.
- Initiation of the EIA for Wheeler River
During June 2019, Denison announced that the Canadian Nuclear Safety Commission (‘CNSC’) and the Saskatchewan Ministry of Environment (‘SK MOE’) accepted the Provincial Technical Proposal and Federal Project Description (the ‘PD’) submitted by Denison for the ISR uranium mining operation proposed for Wheeler River. Acceptance of the PD is the first formal step to commence the EIA process in accordance with the requirements of both the Canadian Environmental Assessment Act, 2012 (‘CEAA 2012’) and the Saskatchewan Environmental Assessment Act.
- Execution of Memoranda of Understanding (‘MOUs’) with Local Communities for Wheeler River
As reported in the PD, Denison executed a series of MOUs, in support of the advancement of Wheeler River, with a number of Indigenous communities who assert that the project falls partially or entirely within their traditional territories, and where traditional land use activities are currently practiced within the local and regional area surrounding the project. These non-binding MOUs formalize the signing parties intent to work together in the spirit of mutual respect and cooperation in order to collectively identify practical means by which to avoid, mitigate, or otherwise address potential impacts of the project upon the exercise of Indigenous rights, Treaty rights, and other interests, as well as to facilitate sharing in the benefits that will flow from the project.
- GoviEx Uranium Inc. (‘GoviEx’) (15.41% Denison owned) achieves significant milestone on the Madaouela Project (‘Madaouela’), entering into definitive agreements with the Republic of Niger
In July 2019, GoviEx announced that it had entered into definitive agreements with the Republic of Niger to finalize the commercial terms necessary to advance the development of Madaouela. As part of these agreements, the Republic of Nigerreceives a 10% working interest in Madaouela in exchange for the settlement of approximately USD$14,500,000 in claims due by GoviEx to the state – implying a valuation for the Madaouela Project of USD$145,000,000.
- Denison Environmental Services (‘DES’) renews cornerstone environmental services contract with BHP Group Limited (‘BHP’)
Effective July 1, 2019, DES entered into a new two-year services agreement with Rio Algom Limited, a subsidiary of BHP. Under the terms of the agreement, DES is responsible for carrying out the management and operation of nine of BHP’s decommissioned mine sites in Ontario and Quebec.
About Wheeler River
Wheeler River is the largest undeveloped uranium project in the infrastructure rich eastern portion of the Athabasca Basin region, in northern Saskatchewan – including combined Indicated Mineral Resources of 132.1 million pounds U3O8 (1,809,000 tonnes at an average grade of 3.3% U3O8), plus combined Inferred Mineral Resources of 3.0 million pounds U3O8 (82,000 tonnes at an average grade of 1.7% U3O8). The project is host to the high-grade Phoenix and Gryphon uranium deposits, discovered by Denison in 2008 and 2014, respectively, and is a joint venture between Denison (90% and operator) and JCU (Canada) Exploration Company Limited (10%).
A pre-feasibility study (‘PFS’) was completed in late 2018, considering the potential economic merit of developing the Phoenix deposit as an ISR operation and the Gryphon deposit as a conventional underground mining operation. Taken together, the project is estimated to have mine production of 109.4 million pounds U3O8 over a 14-year mine life, with a base case pre-tax NPV of $1.31 billion (8% discount rate), Internal Rate of Return (“IRR”) of 38.7%, and initial pre-production capital expenditures of $322.5 million. The Phoenix ISR operation is estimated to have a stand-alone base case pre-tax NPV of $930.4 million (8% discount rate), IRR of 43.3%, initial pre-production capital expenditures of $322.5 million, and industry leading average operating costs of US$3.33/lb U3O8. The PFS was prepared on a project (100% ownership) and pre-tax basis, as each of the partners to the Wheeler River Joint Venture are subject to different tax and other obligations.
Further details regarding the PFS, including additional scientific and technical information, as well as after-tax results attributable to Denison’s ownership interest, are described in greater detail in the NI 43-101 Technical Report titled “Pre-feasibility Study for the Wheeler River Uranium Project, Saskatchewan, Canada” dated October 30, 2018 with an effective date of September 24, 2018. A copy of this report is available on Denison’s website and under its profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.
Readers should note that mineral resource tonnage information was previously omitted from the Company’s public disclosures in the ‘About Wheeler River’ section of certain prior press releases. The Ontario Securities Commission advised the Company of this omission, which was observed in connection with a review of the Company’s disclosure record. The information has been included herein, and will be included in all applicable future disclosures, in compliance with the requirements of National Instrument NI 43-101.
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. In addition to the Wheeler River project, Denison’s Athabasca Basin exploration portfolio consists of numerous projects covering approximately 305,000 hectares. Denison’s interests in the Athabasca Basin also include a 22.5% ownership interest in the McClean Lake joint venture (“MLJV”), which includes several uranium deposits and the McClean Lake uranium mill, which is currently processing ore from the Cigar Lake mine under a toll milling agreement, plus a 25.17% interest in the Midwest and Midwest A deposits, and a 66.51% interest in the J Zone and Huskie deposits on the Waterbury Lake property. Each of Midwest, Midwest A, J Zone and Huskie are located within 20 kilometres of the McClean Lake mill.
Denison is also engaged in mine decommissioning and environmental services through its Denison Environmental Services division and is the manager of Uranium Participation Corp., a publicly traded company which invests in uranium oxide and uranium hexafluoride.
Technical Disclosure and Qualified Person
The disclosure of scientific and technical information regarding Denison’s properties in this news release was prepared or reviewed by Dale Verran, MSc, P.Geo., Pr.Sci.Nat., the Company’s Vice President, Exploration, a Qualified Person in accordance with the requirements of NI 43-101.
Source: Denison Mines Corp.