TORONTO, March 20, 2020 /CNW/ - Denison Mines
Corp. ("Denison" or the "Company") (DML: TSX, DNN: NYSE
American) announced today a temporary suspension of activities
related to the environmental assessment ("EA") for the Company's
90% owned Wheeler River Uranium Project ("Wheeler River" or the
"Project"). An important element of the EA process is the
completion of extensive in-person engagement and consultation
activities with various interested parties and community
groups. The decision to suspend the EA process and other
discretionary activities is motivated by 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. View PDF version.
David Cates, Denison's President
& CEO, commented, "Considering the interactive nature of the
engagement and consultation activities planned to support the
Environmental Assessment process for Wheeler River, and the
considerable uncertainty that has impacted capital markets, we
believe that the decision to temporarily suspend the EA is in the
best interest of all interested parties. Our team made great
progress in 2019 and early 2020 towards advancing the EA and
de-risking the proposed In-Situ Recovery ('ISR') uranium mine
planned for the Phoenix
deposit. During the temporary suspension we expect to be
focused on making the most of our positive momentum and positioning
ourselves to quickly resume the process when
appropriate."
The duration of the temporary suspension is unknown at this
time. The Company intends to monitor the COVID-19 situation
and will coordinate the resumption of the EA with the applicable
regulators and interested parties. Further information will
be provided as appropriate.
Background on the Project's Environmental Assessment
Process
The EA is a planning and decision-making tool, which involves
predicting potential environmental effects throughout the project
lifecycle (construction, operation, decommissioning and
post-decommissioning) at the site, and within the local and
regional assessment areas. During the first quarter of 2019,
Denison submitted a Project Description to the Canadian Nuclear
Safety Commission ("CNSC") and a Technical Proposal to the
Saskatchewan Ministry of Environment ('SK MOE') to support the
advancement of an In-Situ Recovery ("ISR") uranium mine at Wheeler
River. This work followed the release of the Pre-Feasibility Study
("PFS") 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 (see
press release dated October 30, 2018)
.
The Project Description and Technical Proposal were accepted in
the second quarter of 2019, initiating the EA process for the
Project in accordance with the requirements of both the Canadian
Environmental Assessment Act, 2012 ('CEAA 2012') and the
Saskatchewan Environmental Assessment Act. In late
December 2019, Denison received a
Record of Decision from the CNSC on the scope of the factors to be
taken into account for the Wheeler EA, which indicate that the EA
will follow the CNSC's generic guidelines. Significant
progress has been made in collecting environmental baseline data in
previous years, and the current focus of EA related activities is
split between engagement with interested parties and the completion
of various environmental assessments and studies related to the
predicted environmental effects of the Project.
The Company identified the EA process as a key element of the
Project's critical path. Accordingly, Denison initiated
various studies and assessments to support the preparation of the
Project Environmental Impact Statement ("EIS"), following the
decision to advance the Wheeler River project in late 2018 (see
press release dated December 18,
2018). The decision to temporarily suspend the EA process is
expected to impact the project development schedule outlined in the
PFS for Wheeler River. Given the uncertainty associated
with the duration of the suspension, the Company is not currently
able to estimate the impact to schedule. Further information,
including a revised development schedule, will be provided as
appropriate.
Impact on Outlook for 2020
The Company announced its plans for 2020 in its annual MD&A
for the year ended December 31, 2019
(the "2020 Outlook"). Those plans identified two
discretionary work programs related to the advancement of Wheeler
River: (1) the continuation of the EA and submission of a draft EIS
to the Federal and Provincial regulators (approximately
$7.0 million), and (2) the completion
of further ISR field testing to support wellfield designs for a
future Feasibility Study (approximately $6.6
million). Given the decision to suspend the EA, and
the current economic disruption associated with COVID-19, these
work programs are not currently expected to advance in 2020.
Based on the 2020 Outlook, the Company intends to maintain its
environmental and technical teams in 2020 and to selectively
advance certain scopes of work, outside of the discretionary work
programs, to position the Company to quickly resume project
development activities in the future and minimize the impact to the
project schedule.
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%).
Pursuant to the PFS, 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 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 66.57% 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.
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 EA process, including
its intended scope, objectives and timing; the results of the PFS
and expectations with respect thereto (including potential for
delays as a result of the temporary suspension of the EA and other
discretionary programs and expenditures); evaluation and
development plans and objectives generally and in Denison's 2020
Outlook; 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, if market conditions remain volatile and/or COVID-19
mitigation measures result in more social and economic disruptions,
Denison may need to further re-assess its discretionary and
non-discretionary expenditures and programs for 2020 and beyond,
which could have significant impacts on Denison and/or the
development of the Project. 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 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 news 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, the United States Securities and Exchange Commission
("SEC") does not recognize them. '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. The estimates of
mineral reserves in this news release have been prepared in
accordance with NI 43-101. The definition of probable mineral
reserves used in NI 43-101 differs from the definition used by the
SEC in the SEC's Industry Guide 7. Under the requirements of
the SEC, mineralization may not be classified as a "reserve" unless
the determination has been made, pursuant to a "final" feasibility
study that the mineralization could be economically and legally
produced or extracted at the time the reserve determination is
made. Denison has not prepared a feasibility study for the purposes
of NI 43-101 or the requirements of the SEC. Accordingly,
Denison's probable mineral reserves disclosure may not be
comparable to information from U.S. companies subject to the
reporting and disclosure requirements of the SEC.
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SOURCE Denison Mines Corp.