TORONTO, ON, Dec. 1, 2020 /PRNewswire/ - Denison Mines
Corp. ("Denison" or the "Company") (TSX: DML) (NYSE
American: DNN) is pleased to announce the completion of a trade-off
study assessing the merit of adopting a freeze wall design as part
of the in-situ recovery ("ISR") mining approach planned for the
high-grade Phoenix uranium deposit
("Phoenix"), at the Company's 90% owned Wheeler River Uranium
Project ("Wheeler River" or the "Project"). Based on the results of
the trade-off study, discussed below, a freeze wall design has the
potential to offer significant environmental, operational, and
financial advantages compared to the freeze cap (or freeze "dome")
design previously planned for the project and included in the
project's Pre-Feasibility Study ("PFS") (see news release dated
Sept. 24, 2018). View PDF
version
Accordingly, the Company has decided to adapt its plans for the
Project to use a freeze wall in future Project design and
environmental assessment efforts. The trade-off study (see details
below) highlights the following significant benefits of a freeze
wall design:
- Enhanced environmental design: The freeze wall design
provides full hydraulic containment of the ISR well field by
establishing a physical perimeter around the mining area, which
will extend from the basement rock underlying Phoenix to surface – enhancing environmental
protection in the area of the ISR mining operation, thereby
minimizing potential environmental impacts during the life of the
operation, while still establishing a defined area for
decommissioning and reclamation;
- Lower technical complexity and operational risks: A
freeze wall is expected to be installed using existing and proven
vertical or angled diamond drilling methods, rather than the
directional / horizontal drilling approach proposed to establish a
freeze cap. The use of conventional diamond drilling methods is
expected to substantially decrease the technical complexity
associated with project construction. Similarly, the adaptation of
previous plans (described in the PFS), to remove the cap design is
expected to significantly reduce operational risks by eliminating
the potential intersection of freeze holes during the installation
of future ISR wells – as the ISR wells will no longer have to
pierce a freeze cap to access the mining horizon;
- Expected reduction in initial capital costs, with phased
mining approach: The freeze cap design contemplated the use of
a small number of large horizontal freeze holes to encapsulate the
entire Phoenix deposit at depth
prior to first production. In contrast, the freeze wall design,
which consists of vertical / angled freeze holes, provides the
flexibility for a phased mining approach that requires only a
limited initial freeze wall installation to commence mining – with
additional ground freezing occurring throughout the life of the
mine in sequential phases. Preliminary designs for mining of the
Phoenix deposit, using a freeze
wall approach, now call for five phases, thus reducing the
Project's upfront capital requirements and initial ground freezing
time. The planned phases are expected to target the least
capital-intensive areas of the deposit first (higher grades,
smaller footprint) to defer capital costs as much as possible and
simultaneously shorten the Project construction schedule;
- Strengthened project sustainability: The predominant
drilling method used in the freeze wall design is conventional
diamond drilling. This existing and proven method is widely
employed and established in northern Saskatchewan. Accordingly, it is anticipated
that Denison will be able to leverage the existing skilled work
force in the region to increase business and employment
opportunities for residents of Saskatchewan's north.
This press release constitutes a "designated news release"
for the purposes of the Company's prospectus supplement dated
November 13, 2020 to its short form
base shelf prospectus dated April 2,
2020.
David Bronkhorst, Denison's Vice
President Operations, commented, "The adoption of the freeze
wall design for ISR mining at Phoenix is potentially transformational for
the Project. The phased approach allows for targeted mining
of select areas of the deposit, thus potentially allowing for a
meaningful reduction in upfront capital costs and project
construction timelines. The new configuration, whereby freeze
holes are drilled parallel to and surrounding the ISR wells, also
alleviates a number of technical and environmental complexities by
using established diamond drilling techniques, reducing the
potential for unplanned interactions between the ISR mining
operation and the environment, and also effectively eliminating the
possibility of intersections of freeze well infrastructure during
the installation of ISR mining wells."
The freeze wall design for Phoenix incorporates knowledge acquired
through the development of the hydrogeologic model for Phoenix (see news release dated June 4, 2020) and builds on Denison's efforts to
assess a freeze wall design as part of the Preliminary Economic
Assessment ("PEA") for the Waterbury Lake Property ("Waterbury")
(see news release dated Nov. 17,
2020).
Trade-Off Study Background
As part of its ongoing efforts to advance Phoenix towards a future feasibility study,
Denison completed a detailed freeze design trade-off study
comparing the risks and benefits of the freeze cap design included
in the Wheeler River PFS to a freeze wall design similar to that
outlined in the Waterbury PEA. The study confirmed that the
freeze wall design has the potential to offer significantly lower
overall Project risk and complexity in a number of areas evaluated
– including health and safety, environment, regulatory acceptance,
community relations, and technical feasibility.
The key difference between the freeze wall and freeze cap
configurations at Phoenix is the
containment geometry. The freeze wall encompasses the deposit
vertically from the surface down to the impermeable basement rocks,
and the mining solution is contained to the area in and above the
deposit (Figure 1 and Figure 2), keeping it isolated from the
surrounding groundwater. The freeze cap geometry described in the
PFS provided a horizontal layer of containment directly above the
deposit, providing localized containment in the immediate area
around the ore body, but does not extend the full length of the ISR
wells to surface.
A freeze wall is expected to be installed using conventional
diamond drilling techniques – an established and low risk
drilling method frequently used in the Athabasca Basin. By comparison, the freeze cap
requires the use of specialized horizontal drilling techniques
which, while successfully used in the oil and gas industry in
southern Saskatchewan, increase
the technical complexity of the Project.
The technical feasibility of the freeze wall approach has been
further validated by key qualified persons in the areas of
hydrogeology, freeze containment, commercial drilling, and
metallurgy, as discussed below.
Phased Mining Approach
The trade-off study identified a key opportunity associated with
the flexible design of a freeze wall – allowing for the freeze wall
to be installed in phases and to adopt a phased mining approach at
Phoenix. In a phased mining approach, only a limited initial
freeze wall is required to support first production, with the
subsequent expansion of the freeze wall perimeter allowing for
additional mining phases to be brought into production.
The phased approach is expected to allow for the targeted
extraction of the least capital-intensive reserves first, based on
the average ore grade in various areas of the deposit. The
trade-off study provides for mining to occur over 5 phases, as
outlined in Table 1 and Table 2 below, and illustrated in Figure 1
and Figure 2. This approach is expected to match the overall
mine production schedule of the PFS.
Table 1. Freeze
Wall Phased Mining Approach
|
|
Phase 1
|
Phase 2
|
Phase 3
|
Phase 4
|
Phase 5
|
Total
|
Reserves (% of
total)*
|
36%
|
26%
|
14%
|
15%
|
9%
|
100%
|
Expected Life
(months)
|
43
|
31
|
17
|
19
|
11
|
121
|
*Note: These
amounts are estimates and projections only and do not include
Phoenix Zone B2 reserves of 133,000 lbs
U3O8. The aggregate reserves, and many
of the assumptions and qualifications related thereto, as well as
the mine plan associated with the declared reserves are set forth
in the Wheeler River PFS.
|
Table 2. Freeze
Wall Holes Drilled Per Phase
|
|
Phase 1
|
Phase 2
|
Phase 3
|
Phase 4
|
Phase 5
|
Total
|
Expected (# of
holes)
|
57
|
41
|
54
|
52
|
118
|
322
|
Expected
Meterage
|
24,500
|
17,600
|
23,200
|
22,400
|
50,700
|
138,400
|
The freeze wall construction requirements for Phase 1 include 57
vertical freeze holes with 24,500 metres of diamond drilling. For
comparison, the PFS model for the freeze cap included 30 horizontal
freeze holes installed during construction for an overall drilling
meterage of 32,700 m, using much more
expensive horizontal drilling methods. With the freeze wall design,
subsequent mining phase areas would be established prior to
completion of mining in the previous phase area to provide
uninterrupted mine production. Current plans for the freeze wall
design excludes the reserves included in the PFS for Phoenix Zone
B2 (illustrated in Figure 2), which contains approximately 133,000
lbs U3O8 in reserves per the PFS –
representing 0.2% of the total reserves for Phoenix outlined in the PFS. This
expected change is driven by the estimated costs and other
assumptions set forth in the PFS, plus the estimated incremental
cost of an expansion of the freeze wall, rendering mining in this
area uneconomic.
As is evident from the tables above, the freeze wall phased
approach is anticipated to minimize initial capital and
construction timeline requirements for the Project by spreading out
the freeze wall construction over the life of mine. Only the Phase
1 freeze wall is required during initial construction to achieve
first mine production. A reduced initial freeze wall also has a
reduced initial freeze plant capacity requirement. As the freeze
plant is modular in design, the freezing capacity can also be
deferred over the life of mine. The projected lower initial capital
requirements associated with the phased freeze wall approach are
expected to have positive impacts on the economics of the
Project.
Technical Considerations
The freeze wall approach at Phoenix is expected to reduce technical
complexity and operational risk during construction and the life of
mine operations.
During construction, the freeze wall design makes use of
established diamond drilling methods and ground freezing techniques
currently in use at various existing mining operations in the
Athabasca Basin region. This
drilling method and design has a significantly lower technical risk
profile than the horizontal drilling required as part of the freeze
cap design included in the Wheeler River PFS – which is expected to
result in greater certainty around both costs and schedule during
the critical Project construction phase.
During operations, there is lower risk of unplanned interaction
between ISR wells and freeze holes with the freeze wall design when
compared to the freeze cap in the Wheeler River PFS. As the freeze
wall holes are vertical and situated around the perimeter of the
mining zone, there is minimal risk of the subsequent drilling of
ISR wells intersecting and damaging a freeze hole. The freeze
wall design is also much more flexible as it can be installed in
phases over the mine life. This could allow for adjustments in
parameters such as freeze hole spacing, ISR well patterns, and mine
planning based on actual operating results. This approach
also allows for the potential to extend the mine life to include
additional uranium mineralization outside of the existing mine plan
(and extents of the previously planned freeze cap) that may be
discovered subsequent to initial construction of the mine.
Freeze Modelling
As part of the trade-off study, third party expert assessments
were conducted to validate the freeze wall design by Newmans
Geotechnique Inc. ("Newmans"). The assessment successfully
confirmed the viability of adopting the freeze wall configuration
with a phased approach over the life of mine.
In addition to validating the freeze wall design, freeze
modelling also identified an opportunity to reduce the initial
refrigerant capacity of the freeze plant, compared to the estimates
included in the Wheeler River PFS, due to the phased approach of
freeze wall development, with refrigeration capacity being added as
required throughout the life of operations.
Hydrogeologic Modeling
The freeze wall and freeze cap designs both offer a form of
hydrogeologic containment for the ISR mining solution that is
required to move through the host rock at the mining horizon as
part of the use of the ISR mining method at Phoenix. The
validity of the freeze wall design was evaluated by Petrotek
Corporation ("Petrotek") as part of the trade-off study. The
comprehensive hydrogeologic groundwater model developed for the
Project (see press release dated June 4,
2020) was updated to assess potential hydrogeologic and
operational impacts of the use of a freeze wall compared to the
freeze cap. The key revisions to the hydrogeologic model were the
placement of a vertical freeze wall, the removal of the horizontal
freeze cap, and the inclusion of the full sequence of sandstone
units above the deposit (no longer isolated by the freeze cap). All
other parameters, including ISR operating rates, were unchanged
between the original and revised models.
The resultant modelling and flow-path analysis indicated that,
under the simulated operating conditions, the maximum height that
injected fluids will move above the ore zone horizon is generally
less than 1 metre. As this is an important environmental and
operational consideration, additional sensitivity analysis was
conducted to evaluate the potential for upward migration of mining
solutions during ISR operations. Horizontal and vertical hydraulic
conductivity values in the model were increased by a factor of 10
to test the sensitivity of the model to extreme circumstances,
which lead to a maximum upward migration of mining solution above
the ore zone horizon between 11 and 13 metres. In both operational
scenarios the mining solutions are fully contained within the
freeze wall perimeter.
Environmental Considerations
The objective of a freeze wall is the same as the freeze cap, as
outlined in the Wheeler River PFS, which is to protect the
surrounding environment from interactions with the ISR mining
process – by providing containment of the ISR mining solution
through the creation of a physical barrier between the mining
horizon and surrounding environment. Compared to the freeze cap,
the freeze wall extends the containment area beyond the area
immediately surrounding the ore zone, from deposit depth up to
surface – thereby providing physical containment around the entire
ISR well field from well screen (at depth) to well head (at
surface). Accordingly, in the event of an ISR well failure at
any depth along the well, any released mining solutions will be
contained by the freeze wall perimeter. This is expected to provide
enhanced environmental protection for the Project.
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%).
The scientific and technical information in this press
release, with respect to the Project, is supported by the Wheeler
River PFS. While potential advantages of the adaptation of
the design of freeze containment have been described herein, the
freeze wall design is not expected to constitute a material change
to the information in the PFS.
The 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.
Denison suspended certain activities at Wheeler River during
2020, including the formal Environmental Assessment ("EA") process,
which is on the critical path to achieving the project development
schedule outlined in the PFS. On November 9, 2020, Denison announced its decision
to resume the formal EA process for the Project in January 2021. The Company is not currently able
to estimate the impact to the project development schedule outlined
in the PFS, and users are cautioned against relying on the
estimates provided therein regarding the start of pre-production
activities in 2021 and first production in 2024.
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 66.90% interest in the The Heldeth Túé
("THT", formerly J Zone) and Huskie deposits on the Waterbury Lake
property. Each of Midwest, Midwest A, THT and Huskie are located
within 20 kilometres of the McClean Lake mill.
Denison is 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.
Follow Denison on Twitter @DenisonMinesCo
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 results and interpretations contained in this release
related to ground freezing components and modeling for Phoenix were prepared by Mr. Greg Newman, BE (mechanical) M.Sc.
(geotechnical), P. Eng. (SK, NWT), at Newmans Geotechnique Inc.,
who is an independent Qualified Person in accordance with the
requirements of NI 43-101.
The technical information contained in this release has been
reviewed and approved by Mr. David
Bronkhorst, P.Eng, Denison's Vice President, Operations, who
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
trade-off study and its underlying assumptions and the Company's
intentions with respect thereto; the duration and scope of impacts
of the COVID-19 pandemic and affiliated operational adjustments;
the availability of third party experts and services; 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 freeze wall trade-off study
discussed herein may not be maintained after further testing or be
representative of actual mining plans for the Phoenix deposit after further design and
studies are completed. In addition, Denison may decide or
otherwise be required to discontinue 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.
Figure 1: Proposed Phoenix Wellfield and Freeze Wall
Containment Configuration.
Plan view of Phoenix freeze wall at surface and long
section view of Phoenix freeze
wall from A to B. Long section C to D indicates the ore zone
horizon cut away for Figure 2
Figure 2. Isometric View of Phoenix Freeze Wall at Ore
Level.
C to D indicates the ore zone horizon cut away
from the Phoenix long section in
Figure 1.
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SOURCE Denison Mines Corp.