TORONTO, June 4, 2020 /CNW/ - Denison Mines
Corp. ("Denison" or the "Company") (TSX: DML) (NYSE
American: DNN) is pleased to announce that the hydrogeologic model
developed by Petrotek Corporation ("Petrotek"), for the high-grade
Phoenix uranium deposit
("Phoenix), produced demonstration
of "proof of concept" for the application of the In-Situ Recovery
("ISR") mining method at Phoenix,
with respect to potential operational extraction and injection
rates. The hydrogeologic model was developed based on the data
collected from the ISR field test completed in 2019 ("2019 Field
Test") (see press release dated December
18, 2019). Based on the positive results from the
hydrogeologic model, Denison is also pleased to announce the
details of its plans for the continuation of ISR field testing in
2020, within Phoenix, at the
Company's 90% owned Wheeler River Uranium Project ("Wheeler
River"), located in northern Saskatchewan, Canada. View PDF
version.
David Bronkhorst, Denison's Vice
President Operations, commented, "Petrotek applied a rigorous
process of calibration to several numerical models developed based
on hydrogeologic data collected from 19 test wells installed into
the Phoenix deposit during the
2019 Field Test. Based on this site-specific data, the
hydrogeologic model allowed for the simulation of an ISR wellfield
including a total of 18 extraction wells and 33 injection wells
across Test Area 1 and Test Area 2 of Phoenix. Based on these
simulations, Petrotek concluded that the results demonstrated
'proof of concept' for the use of ISR mining at Phoenix. This
result represents a significant milestone in the ongoing de-risking
of the use of the ISR mining method at Phoenix. Our plans for
additional field testing in 2020 are expected to build on our
success from 2019, further confirm the hydrogeological model
completed by Petrotek, and prepare for field tests in future years,
which are expected to support a feasibility study – including a
potential in-ground lixiviant test or ISR demonstration."
Hydrogeologic Modeling
Denison engaged Petrotek to facilitate the design and
implementation of ISR field testing at Phoenix in 2019. Petrotek is an independent
qualified technical specialist firm with unique expertise in the
evaluation and field operations of subsurface fluid flow and
injection projects, with experience ranging from feasibility
studies to facility operation. The firm has more than 20 years of
experience in the ISR uranium mining industry and has provided
consulting services to each of the ISR uranium miners in
the United States.
Petrotek and Denison designed the 2019 Field Test for the unique
geological characteristics of Phoenix. The testing program aimed to collect
hydrogeological data in Test Area 1 and Test Area 2 of Zone A at
Phoenix. Data acquired from the 2019 Field Test was collected
and analyzed to support the development of an integrated
hydrogeological model to better define areas of the deposit
contributing to fluid flows and ultimately to facilitate future ISR
wellfield designs necessary to support a Feasibility Study ("FS")
and the Environmental Assessment ("EA") process.
Highlights of the hydrogeologic modeling completed by Petrotek
include the following:
- Numerical groundwater flow models were developed using
site-specific data to evaluate the hydraulic responses of the ore
zone aquifer observed during hydrogeologic field testing conducted
at Phoenix in 2019;
- Multiple models were constructed to address the lateral and
vertical variability in hydraulic conductivity (a measure of
permeability) observed at the site;
- Modeling was limited to the physical flow of water through the
groundwater system and did not address any geochemical reactions of
injected fluids within the aquifer matrix or native
groundwater;
- The hydrogeologic model developed for Phoenix consisted of five layers, including
one layer for the overlying Athabasca sandstone above the ore zone, one
layer for the underlying paleo weathered unmineralized basement
below the ore zone, and three subdivided layers within the ore
zone;
- The uppermost layer of the ore zone represents the upper clay
unit, the middle layer represents the more permeable friable unit,
and the lower layer represents the lower clay unit. The combined
thickness of the three layers is six metres with the thickness of
the middle layer simulated in multiple models. A two metre interval
was assumed to be the most representative of the overall in-situ
conditions of the deposit, with the resultant model being referred
to as the "2M" model.;
- Each model was calibrated to the actual test results from the
2019 Field Test, such that the "head" (defined as a specific
measurement of liquid pressure vertically above a reference point)
changes resulting from simulations in the models were similar to
the observed changes in the actual tests;
- The calibrated numerical models were then used to estimate
hydraulic responses of the ore zone aquifer under conditions
representative of ISR operations. Single well pattern simulations
were run under a variety of scenarios, including typical 5-spot and
7-spot well patterns, variable distances between wells (5 to 15
metres), and variable pumping and injection rates;
- Results of the single well pattern simulations were used to
further investigate the feasibility of ISR for uranium extraction
by developing a wellfield simulation using the 2M model and 5-spot well patterns placed across
Test Area 1 and Test Area 2 of Phoenix at approximate 10 metre spacings
between wells – including a total of 18 extraction / recovery wells
and 33 injection wells;
- Test Area 1 extraction wells were simulated at 5 gallons per
minute ("GPM") or less, and Test Area 2 extraction wells were
simulated at 7.5 GPM or less, with total extraction for the
simulation at 105.5 GPM and total injection of 105.4 GPM for a
nearly balanced operational flow;
- The simulation was carried out within test area boundaries,
reflecting the proposed freeze walls that are planned to
encapsulate the ISR wellfield. No attempts were made to optimize
operational rates with respect to sweep efficiency or simulated
lixiviant travel time;
- As expected, there was large variability in travel times from
injection well to extraction well, with the average flow path
travel time estimated at 55 days, with 71% of flow paths being
completed in fewer than 55 days;
- A 180-day simulation was completed with approximately 80% of
the injected fluids estimated to be captured during the simulation
period.
While the results of these simulations (including well patterns,
spacing and flow rates) should be viewed as preliminary, and should
not be considered wellfield plans or projections of actual
operations, Petrotek's Interim Hydrogeologic Report has drawn the
following important conclusions:
- The modelling results generally provide a demonstration of
"proof of concept" for application of ISR to the Phoenix ore body, with respect to potential
operational extraction and injection rates; and
- With positive results associated with the various permeability
measures and models reported to date, the further adjustment of
operational parameters (e.g. well spacing, injection pressures,
uranium recoveries), along with the engineered enhancement of
in-situ permeability (such as MaxPERF drilling - see press release
dated December 18, 2019), should
allow for potentially significant optimization of the hydrogeologic
model in the future.
2020 ISR Field Test Program
During the summer and fall months of 2020, Denison plans to
collect additional hydrogeological data as part of an ISR field
test program ("the 2020 Field Test") at Phoenix. The 2020 Field Test is designed to
further evaluate and de-risk the ISR mining conditions present at
Phoenix, by supplementing the
extensive dataset acquired as part of the 2019 Field Test.
Hydrogeological data collected as part of the 2020 Field Test is
expected to build additional confidence in the Company's
understanding of the fluid pathways within Test Area 1 and Test
Area 2, to further validate the hydrogeological model completed by
Petrotek, and to prepare for field tests in future years, which are
expected to support a FS – including a potential in-ground
lixiviant test or ISR demonstration.
The 2020 Field Test is expected to utilize existing Commercial
Scale Wells ("CSWs") and Small Monitoring Wells ("SMWs"), installed
as part of the 2019 Field Test, as well as mineralized and
non-mineralized drill core recovered from the 2019 Field Test.
Key elements of the 2020 Field Test include:
- Additional pump/injection tests within Test Area 1 and Test
Area 2 of the Phoenix
deposit
-
- To confirm the long-term stability of engineered permeability
enhancement tunnels; and
- Collection of data from additional injection points not
previously tested.
- Groundwater sampling
-
- Collection of data from various horizons within and above the
Phoenix ore zone to characterize
the baseline hydrogeochemistry in the deposit area.
Understanding of the hydrogeochemistry is expected to be necessary
to support the planning and permitting of a potential field test in
future years for an in-ground lixiviant test or ISR
demonstration;
- Groundwater sampling, in conjunction with future column leach
test work, is expected to provide data needed to conduct reactive
transport models (i.e. models that involve kinetically dissolving a
mineral in a groundwater system). These models may be used to
determine the overall dissolution rate of the ore (primarily
uraninite) and the flow of the lixiviant through the formation,
including residence time, to estimate overall mill feed rate.
- Permeameter analysis
-
- Collection of additional matrix permeability data from drill
core previously recovered from within Test Area 1 and Test Area 2,
to support further refinement of hydrogeological models with an
enhanced understanding of both large- and small-scale fluid flow
pathways.
- Rock mechanics tests
-
- Collection of data to aid in evaluating the potential utility
of certain permeability enhancement techniques.
The Company previously announced a decision to temporarily
suspend the environmental assessment process for the Wheeler River
project and other discretionary activities due to the significant
social and economic disruption that has emerged as a result of the
COVID-19 pandemic and the Company's commitment to ensure employee
safety, support public health efforts to limit transmission of
COVID-19, and exercise prudent financial discipline. The work
related to the 2020 Field Test is not part of the suspended
activities, and is included in the Company's evaluation budget
contained within the current outlook and operating plan for 2020
(see the Company's Management Discussion and Analysis for the
period ended March 31, 2020).
The Company previously indicated that field activities in 2020
could include the expansion of ISR field test work into Test Area 3
and Test Area 4 of Phoenix Zone A; however, since then, field
testing of the MaxPERF Drilling Tool validated the potential to
normalize the impact of geologic variations throughout the orebody
by mechanically increasing access to existing permeability through
the installation of lateral penetration tunnels from a CSW.
Based on this success, the Company has decided to focus its testing
efforts on Test Area 1 and Test Area 2 with the potential to carry
out, in future years, an in-ground lixiviant test or ISR
demonstration within the existing test areas (rather than expanding
testing efforts to Test Area 3 and Test Area 4). This
approach is expected to substantially de-risk the application of
the ISR mining method at Phoenix
and to support a future FS.
Operational planning for the 2020 Field Test is currently in
progress, with significant consideration being given to public
health guidelines and industry best practices associated with
operating a remote mining camp site in northern Saskatchewan amidst the COVID-19
pandemic. In addition to camp operating procedures and
physical distancing protocols, transportation and travel protocols
are being developed in consultation with various Indigenous and
non-Indigenous communities situated between the Wheeler River
project site and Saskatoon. The Company is committed to
ensuring that the site is a safe operating environment for its
staff and contractors and that the Company's field activities do
not compromise the health and safety of the residents of northern
Saskatchewan. Despite the Company's current intentions, it is
possible that the program may not advance as planned, or as
described above, owing to the social and economic disruptions
associated with the COVID-19 pandemic, which are outside of the
control of the Company – for example, the availability of Company
or contractor staff to attend to the site, Provincial or local
travel restrictions, and changing public health
guidelines.
In-Situ Recovery Mining Method
Denison selected the ISR mining method for the future mining of
Phoenix in the Pre-Feasibility
Study ("PFS") completed for Wheeler River in 2018 (see press
release dated October 30, 2018). In
an ISR mining operation, a mining solution is injected into the ore
zone through a series of injection wells, and then dissolves the
uranium as it travels through the ore zone, before the uranium
bearing solution ("UBS") is then pumped back to surface via a
series of recovery wells. Once on surface, the UBS is sent to a
surface processing plant for the chemical separation of the
uranium. Following the uranium removal, the mining solution is
reconditioned and returned to the wellfield for further production.
The ISR mining method accounts for a significant portion of uranium
mine production globally and is generally considered the lowest
cost uranium mining method in the world – owing to the fact that
the method eliminates the surface disturbances and costs associated
with physically removing ore and waste from the ground, as well as
the tailings treatment and storage, that are normally associated
with underground or open pit mining operations.
The geologic setting of the uranium ore body and the ability of
the mining solution to travel through the orebody (permeability) is
an important element of an ISR mining operation. Accordingly,
much of Denison's work in 2019 was focused on enhancing its
assessment of the permeability of Phoenix through the completion of a series of
ISR field tests – the positive preliminary results of which have
been previously released (see press releases dated December 18, 2019 and February 24, 2020), and the data from which was
incorporated into the hydrogeologic modelling described above.
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 PFS was completed for Wheeler River 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 is 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.
About Denison
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 over 250,000
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 66.57% 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 Closed Mines group (formerly
Denison Environmental Services), which manages Denison's
Elliot Lake reclamation projects
and provides post-closure mine care and maintenance services to a
variety of industry and government clients.
Denison is also the manager of Uranium Participation Corp., a
publicly traded company which invests in uranium oxide and uranium
hexafluoride.
Qualified Persons
The results and interpretations contained in this release
related to the hydrogeological model for Phoenix were prepared by Mr. Errol Lawrence, PG (Senior Hydrogeologist), and
Mr. Aaron Payne, PG (Senior
Hydrogeologist), at Petrotek, each of whom is an independent
Qualified Person in accordance with the requirements of NI
43-101.
The other technical information contained in this release has
been reviewed and approved by Mr. David
Bronkhorst, P.Eng, Denison's Vice President, Operations, or
Mr. Dale Verran, MSc, P.Geo,
Pr.Sci.Nat., Denison's Vice President, Exploration, each of whom is
a Qualified Person in accordance with the requirements of NI
43-101.
Cautionary Statement Regarding Forward-Looking
Statements
Certain information contained in this news release
constitutes 'forward-looking information', within the meaning of
the applicable United States and
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', 'budget', 'scheduled', 'estimates', 'forecasts',
'intends', 'anticipates', or 'believes', or the negatives and/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'.
In particular, this news release contains forward-looking
information pertaining to the following: the results of the 2019
Field Test; the hydrogeologic model and its underlying assumptions;
the 2020 Field Test, including its intended scope and timing,
objectives and evaluation interpretations; the duration and scope
of impacts of the COVID-19 pandemic and affiliated operational
adjustments; the current and continued use and availability of
third party technologies for testing; the results of the PFS and
expectations with respect thereto; development and expansion plans
and objectives, including plans for a feasibility study; and
expectations regarding its joint venture ownership interests and
the continuity of its agreements with its partners.
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.
For example, the results of the 2019 Field Test, hydrogeologic
model and/or 2020 Field Test discussed herein may not be maintained
after further testing or be representative of actual conditions
within the Phoenix deposit.
In addition, Denison may decide or otherwise be required to
discontinue the 2020 Field Test or other testing, evaluation and
development work at Wheeler River if it is unable to maintain or
otherwise secure the necessary resources (such as testing
facilities, capital funding, regulatory approvals, etc.) or
operations are otherwise affected by COVID-19 and its potentially
far-reaching impacts. 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
accurate and results may differ materially from those anticipated
in this forward-looking information. For a discussion in respect of
risks and other factors that could influence forward-looking
events, please refer to the factors discussed in Denison's Annual
Information Form dated March 13, 2020
or subsequent quarterly financial reports under the heading 'Risk
Factors'. These factors are not, and should not be construed as
being exhaustive.
Accordingly, readers should not place undue reliance on
forward-looking statements. The forward-looking information
contained in this news release is expressly qualified by this
cautionary statement. Any forward-looking information and the
assumptions made with respect thereto speaks only as of the date of
this news release. Denison does not undertake any obligation to
publicly update or revise any forward-looking information after the
date of this news 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 Mineral Resources and
Probable Mineral Reserves: This press release may use
the terms 'measured', 'indicated' and 'inferred' mineral resources.
United States investors are
advised that while such terms have been prepared in accordance with
the definition standards on mineral reserves of the Canadian
Institute of Mining, Metallurgy and Petroleum referred to in
Canadian National Instrument 43-101 Mineral Disclosure Standards
('NI 43-101') and are recognized and required by Canadian
regulations, these terms are not defined under Industry Guide 7
under the United States Securities Act and, until recently, have
not been permitted to be used in reports and registration
statements filed with the United States Securities and Exchange
Commission ('SEC'). '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. In addition, the terms "mineral reserve",
"proven mineral reserve" and "probable mineral reserve" for the
purposes of NI 43-101 differ from the definitions and allowable
usage in Industry Guide 7. Effective February 2019, the SEC adopted amendments to its
disclosure rules to modernize the mineral property disclosure
requirements for issuers whose securities are registered with the
SEC under the Exchange Act and as a result, the SEC now recognizes
estimates of "measured mineral resources", "indicated mineral
resources" and "inferred mineral resources". In addition, the SEC
has amended its definitions of "proven mineral reserves" and
"probable mineral reserves" to be "substantially similar" to the
corresponding definitions under the CIM Standards, as required
under NI 43-101. However, information regarding mineral
resources or mineral reserves in Denison's disclosure may not be
comparable to similar information made public by United States companies.
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SOURCE Denison Mines Corp.