TORONTO, Oct. 30, 2018 /CNW/ - Denison Mines Corp.
("Denison" or the "Company") (DML: TSX, DNN: NYSE MKT) today
announces that it filed a technical report under Canadian
Securities Administrators' National Instrument 43-101 Standard
of Disclosure for Mineral Projects for its 90% owned Wheeler
River Project in Saskatchewan
titled "Pre-feasibility Study for the Wheeler River Uranium
Project, Saskatchewan, Canada"
dated October 30, 2018 with an
effective date of September 24,
2018.
View PDF version.
The technical report is posted on the Company's website at
www.denisonmines.com and is available under its profile on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml. This
report supports the disclosure made by the Company in its news
release dated September 24, 2018 (the
"News Release") and there are no material differences contained in
the technical report from the information previously disclosed in
the News Release.
As outlined in the News Release, the PFS considers the potential
economic merit of co-developing the Phoenix and Gryphon deposits. The
high-grade Phoenix deposit is
designed as an In-Situ Recovery ("ISR") mining operation, with
associated processing to a finished product occurring at a plant to
be built on site at Wheeler River. The Gryphon deposit is
designed as an underground mining operation, utilizing a
conventional long hole mining approach with processing of mine
production assumed at Denison's 22.5% owned McClean Lake
mill.
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 Net Present Value ("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 base-case economic analysis
assumes uranium sales are made at UxC Consulting Company, LLC's
("UxC") annual estimated spot price for mine production from the
Phoenix deposit (from ~US$29/lb U3O8 to
US$45/lb U3O8),
and a fixed price for mine production from the Gryphon deposit
(US$50/lb
U3O8).
Using the same price assumed for the project's 2016 Preliminary
Economic Assessment ("2016 PEA"), a fixed uranium price of
US$44/lb U3O8
("PEA Reference Case"), the PFS produces a combined pre-tax project
NPV of $1.41 billion – representing
roughly 275% of the $513 million
pre-tax project NPV estimated in the 2016 PEA.
Pre-Feasibility Study Highlights
- Phoenix delivers
exceptional operating costs and manageable initial capex with
ISR
Mine life
|
10 years (6.0
million lbs U3O8 per year on
average)
|
Probable
reserves(1)
|
59.7 million lbs
U3O8 (141,000 tonnes at 19.1%
U3O8)
|
Average cash
operating costs
|
$4.33 (US$3.33)
per lb U3O8
|
Initial capital
costs
|
$322.5
million
|
Base case pre-tax
IRR(2)
|
43.3%
|
Base case pre-tax
NPV8%(2)
|
$930.4
million
|
Base case price
assumption
|
UxC spot
price(3) (from ~US$29 to US$45/lb
U3O8)
|
Operating profit
margin(4)
|
89.0% at US$29/lb
U3O8
|
All-in
cost(5)
|
$11.57 (US$8.90)
per lb U3O8
|
(1)
|
See below for
additional information regarding Probable reserves;
|
(2)
|
NPV and IRR are
calculated to the start of pre-production activities for the
Phoenix operation in 2021;
|
(3)
|
Spot price
forecast is based on "Composite Midpoint" scenario from UxC's
Q3'2018 Uranium Market Outlook ("UMO") and is stated in constant
(not-inflated) dollars;
|
(4)
|
Operating profit
margin is calculated as uranium revenue less operating costs,
divided by uranium revenue. Operating costs exclude all
royalties, surcharges and income taxes;
|
(5)
|
All-in cost is
estimated on a pre-tax basis and includes all project operating
costs and capital costs, divided by the estimated number of pounds
U3O8 to be produced.
|
- Gryphon leverages existing infrastructure and provides
additional low-cost production
Mine life
|
6.5 years (7.6
million lbs U3O8 per year on
average)
|
Probable
reserves(1)
|
49.7M lbs
U3O8 (1,257,000 tonnes at 1.8%
U3O8)
|
Average cash
operating costs
|
$15.21
(US$11.70) per lb
U3O8
|
Initial capital
costs
|
$623.1
million
|
Base case pre-tax
IRR(2)
|
23.2%
|
Base case pre-tax
NPV8%(2)
|
$560.6
million
|
Base case price
assumption
|
US$50 per pound
U3O8
|
Operating profit
margin(3)
|
77.0% at US$50/lb
U3O8
|
All-in
cost(4)
|
$29.67 (US$22.82)
per lb U3O8
|
(1)
|
See below for
additional information regarding Probable reserves;
|
(2)
|
NPV and IRR are
calculated to the start of pre-production activities for the
Gryphon operation in 2026;
|
(3)
|
Operating profit
margin is calculated as uranium revenue less operating costs,
divided by uranium revenue. Operating costs exclude all
royalties, surcharges and income taxes;
|
(4)
|
All-in cost is
estimated on a pre-tax basis and includes all project operating
costs and capital costs, divided by the estimated number of pounds
U3O8 to be produced.
|
- Selection of ISR mining method for high-grade Phoenix deposit – Following the completion
of the 2016 PEA, the Company evaluated 32 alternate mining methods
to replace the high-cost Jet Bore Mining System ("JBS") assumed for
the Phoenix deposit in the 2016
PEA. The suitability of ISR mining for Phoenix has been confirmed by significant work
completed in the field and laboratory – including drill hole
injection, permeability, metallurgical leach, agitation, and column
tests. Results demonstrate high rates of recovery in both
extraction (+90%) and processing (98.5%) following a simplified
flow sheet that precipitates uranium directly from the uranium
bearing solution ("UBS"), without the added costs associated with
ion exchange or solvent extraction circuits.
- Novel application of established mining technologies –
Given the unique geological setting of the Phoenix deposit, straddling the
sub-Athabasca unconformity in
permeable ground, the project development team has combined the use
of existing and proven technologies from ISR mining, ground
freezing, and horizontal directional drilling to create an
innovative model for in situ uranium extraction in the Athabasca Basin. While each of the
technologies are well established, the combination of technologies
results in a novel mining approach applicable only to deposits
occurring in a similar geological setting to Phoenix – which now represents the first
deposit identified for ISR mining in the Athabasca Basin.
- Environmental advantages of ISR mining at Phoenix – The Company's evaluation of the
ISR mining method for Phoenix has
also identified several significant environmental and permitting
advantages, namely the absence of tailings generation, the
potential for no water discharge to surface water bodies, and the
potential to use the existing Provincial power grid to operate on a
near zero carbon emissions basis. In addition, the use of a freeze
wall, to encapsulate the ore zone and contain the mining solution
used in an ISR operation, eliminates common environmental concerns
associated with ISR mining and facilitates a controlled reclamation
of the site. Taken together, the Phoenix operation has the potential to be one
of the most environmentally friendly mining operations in the
world. Owing largely to these benefits, consultation with
regulatory agencies and stakeholder communities, to date, has been
encouraging regarding the use of ISR mining.
The PFS has been completed in accordance with NI 43-101,
Canadian Institute of Mining, Milling and Petroleum (CIM) standards
and best practices, as well as other standards such as the AACE
Cost Estimation Standards.
Wheeler River Project
The Wheeler River project is the largest undeveloped uranium
project in the eastern portion of the Athabasca Basin region in northern
Saskatchewan, Canada. The
project is situated in close proximity to important regional
infrastructure, including the Provincial electrical transmission
grid and an all-season Provincial highway. Since Denison
became the operator of the project in 2004, two high-grade uranium
deposits have been discovered and now account for combined Mineral
Reserves and Mineral Resources (100% Basis) as follows:
- Probable Mineral Reserves of 109.4 million pounds
U3O8
Deposit
|
Classification
|
Tonnes
|
Grade
|
Lbs
U3O8
|
Phoenix
|
Probable
|
141,000
|
19.1%
|
59.7
million
|
Gryphon
|
Probable
|
1,257,000
|
1.8%
|
49.7
million
|
Total
|
Probable
|
1,398,000
|
3.5%
|
109.4
million
|
Notes:
|
(1)
|
Reserve statement
is as of September 24, 2018;
|
(2)
|
CIM definitions
(2014) were followed for classification of mineral
reserves;
|
(3)
|
Mineral reserves
for the Phoenix deposit are reported at the mineral resource
cut-off grade of 0.8% U3O8. The mineral
reserves are based on the block model generated for the May 28,
2014 mineral resource estimate. A mining recovery factor of 85% has
been applied to the mineral resource above the cut-off
grade;
|
(4)
|
Mineral reserves
for the Gryphon deposit are estimated at a cut-off grade of 0.58%
U3O8 using a long-term uranium price of
USD$40/lb, and a USD$/CAD$ exchange rate of 0.80. The mineral
reserves are based on the block model generated for the January 30,
2018 mineral resource estimate. The cut-off grade is based on
an operating cost of CAD$574/tonne, milling recovery of 97%, and
7.25% fee for Saskatchewan royalties;
|
(5)
|
Mineral reserves
include diluting material and mining losses;
|
(6)
|
Mineral reserves
are stated at a processing plant feed reference
point;
|
(7)
|
Numbers may not
add due to rounding.
|
- Indicated Mineral Resources (inclusive of Reserves) of 132.1
million pounds U3O8 (1,809,000 tonnes at
an average grade of 3.3% U3O8); plus
- Inferred Mineral Resources of 3.0 million pounds
U3O8 (82,000 tonnes at an average grade
of 1.7% U3O8).
The PFS does not include any economic analysis based on
estimated Inferred Mineral Resources.
The project is a joint venture between Denison (90% and
operator) and JCU (Canada)
Exploration Company Limited ("JCU") (10%).
Qualified Persons
The disclosure of the results of the PFS contained in this
news release, including the mineral reserves, was reviewed and
approved by Peter Longo, P. Eng,
MBA, PMP, Denison's Vice-President, Project Development, who is a
Qualified Person in accordance with the requirements of NI
43-101.
The disclosure of a scientific or technical nature regarding
the Phoenix and Gryphon deposits,
including the mineral resources, contained in this news release was
reviewed and approved by Dale
Verran, MSc, P.Geo., Pr.Sci.Nat., Denison's Vice President,
Exploration, who is a Qualified Person in accordance with the
requirements of NI 43-101.
For a description of the data verification, assay procedures
and the quality assurance program and quality control measures
applied by Denison, please see Denison's Annual Information Form
dated March 27, 2018 filed under the
Company's profile on SEDAR at www.sedar.com.
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 its 90.0% owned Wheeler River
project, which ranks as the largest undeveloped high-grade uranium
project in the infrastructure rich eastern portion of the
Athabasca Basin region, Denison's
Athabasca Basin exploration
portfolio consists of numerous projects covering approximately
320,000 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 65.45% interest in the J Zone deposit and
Huskie discovery 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.
Cautionary Statement Regarding Forward-Looking
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", "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 press release contains forward-looking
information pertaining to the results of, and estimates,
assumptions and projections provided in, the PFS, including future
development methods and plans, market prices, costs and capital
expenditures; the Company's current plans with respect to the
commencement and completion of an EA and feasibility study on the
project; assumptions regarding Denison's ability to obtain all
necessary regulatory approvals to commence development; Denison's
percentage interest in its projects and its agreements with its
joint venture partners; and the availability of services to be
provided by third parties. Statements relating to "mineral
resources" are deemed to be forward-looking information, as they
involve the implied assessment, based on certain estimates and
assumptions that the mineral resources described can be profitably
produced in the future.
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 faces certain risks, including the inability to permit or
develop the project as currently planned, the unpredictability of
market prices, the use of mining methods which are novel and
untested in the Athabasca Basin,
events that could materially increase costs, changes in the
regulatory environment governing the project lands, and
unanticipated claims against title and rights to the project.
Denison believes that the expectations reflected in this
forward-looking information are reasonable but there can be no
assurance that such statements will prove to be accurate and 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
"Risk Factors" in Denison's Annual Information Form dated
March 27, 2018 available under its
profile at www.sedar.com and its Form 40-F available at
www.sec.gov/edgar.shtml. 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 press 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 press release. 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 its expectations except as otherwise
required by applicable legislation.
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SOURCE Denison Mines Corp.