Denison Mines Corp. is pleased to announce additional highlights from the completion of the highly successful leaching phase of the ongoing Phoenix in-situ recovery (“ISR”) Feasibility Field Test (“FFT”) at the Company’s 95% owned Wheeler River project.
David Cates, Denison’s President & CEO, commented, “The detailed results from the leaching phase of the Phoenix ISR FFT are very encouraging. Using only one injection well and two recovery wells for a period of active leaching of only ten days, we recovered an estimated 14,400 lbs U3O8 – representing approximately 1% of the mineral reserves estimated to be within the perimeter of the FFT test area. These results provide further tangible evidence of the viability of the ISR mining method at the Company’s high-grade Phoenix uranium deposit.“
Kevin Himbeault, Denison’s Vice President of Plant Operations & Regulatory Affairs, added, “Uranium head grades were increasing at the time the leaching phase of the FFT was completed – returning a maximum uranium head grade of 43 g/l. This is over 300% higher than the head grade assumed in the 2018 PFS, and further supports the Company’s decision to increase the assumed ISR mining head grade by 50% for the feasibility study. Overall, the leaching phase of the FFT has been highly successful – accomplishing our objectives for uranium head grade recovery, uranium mass flow rates, and hydraulic conductivity within the ore zone. These results further support the hydrogeological and metallurgical modelling expected to be incorporated into the feasibility study.“
This press release constitutes a “designated news release“ for the purposes of the Company‘s prospectus supplement dated September 28, 2021, to its short form base shelf prospectus dated September 16, 2021.
In 2021, following the completion of various metallurgical tests, Denison announced a decision to adapt its plans for further metallurgical test work and project designs to reflect a 50% increase in the assumed head grade of uranium bearing solution to be recovered from the Phoenix well-field – from 10 g/L (as outlined in the PFS) to 15 g/L (see news release dated August 4, 2021 for details). An increase in head grade is expected to allow for optimization of operating parameters and processing plant designs in the feasibility study for the Project (see news release dated September 22, 2021).
The increasing uranium head grade observed during the leaching phase of the FFT, including results that exceeded 15 g/L, provide additional support for the decision to increase the assumed head grade in the feasibility study. In a production setting, the uranium bearing solution recovered from ‘new’ production wells, yielding higher than average head grades during the ramp-up segment of a well production profile, is expected to be combined with recovered solution from ‘existing’ production wells producing gradually decreasing head grades over the life of well production profile.
The leaching phase of the FFT commenced in September 2022 (see news release dated September 26, 2022), designed to assess the effectiveness and efficiency of the leaching process in the ore zone located approximately 400m below the surface, is now complete. The leaching phase consisted of the controlled injection of an acidic mining solution into a portion of the existing Test Pattern (defined below) within the ore zone (the “Leaching Zone”) and the recovery of the solution back to the surface using existing test wells. Commercial-scale test well GWR-40 was used as the injection well, while uranium bearing solution was recovered from commercial-scale test wells GWR-41 and GWR-38. These wells are located within Phase 1 of the planned mining areas for Phoenix (See Figure 1 and 2 for photos from the FFT site). Additional details about Phase 1 and the estimated Probable mineral reserves contained therein are provided below.
Throughout the test program, both vertical and horizontal containment of the mining solution was maintained, with no migration of the mining solution observed above, below or outside of the designed FFT test area along the leaching zone. These results were consistent with the findings from the 2021 tracer test (see news release dated October 28, 2021) and further confirmed that both targeted mining head grades and flow rates are achievable while maintaining containment of ISR mining activities to defined areas in the ore zone.
Following the completion of the leaching phase of the FFT in mid-October, field activities transitioned to the neutralization phase of the FFT. The final phase of the FFT, which involves the management of the recovered solution, is expected to begin in the spring of 2023.
The FFT is designed to use the existing commercial-scale ISR test pattern (“Test Pattern”), installed at Phoenix in 2021 (see news releases dated July 29, 2021, and October 28, 2021), to facilitate a combined assessment of the Phoenix deposit’s hydraulic flow properties with the leaching characteristics that have been assessed through the metallurgical core-leach testing program.
The FFT is fully permitted, having been authorized by both the Saskatchewan Minister of Environment (see news release dated July 12, 2022) and the Canadian Nuclear Safety Commission (see news release dated August 8, 2022).
Overall, the FFT is intended to provide further verification of the permeability, leachability, and containment parameters needed for the successful application of the ISR mining method at Phoenix and is expected to validate and inform various feasibility study design elements – including the expected production and remediation profiles.
The operation of the FFT is planned to occur in three phases: (1) the leaching phase, (2) the neutralization phase, and (3) the recovered solution management phase.
As described above, the leaching phase is now complete. The neutralization phase was initiated in mid-October 2022, and is intended to verify the efficiency and effectiveness of the process for returning the Leaching Zone to environmentally acceptable conditions. During this phase, a mild alkaline (basic) solution is injected into the Leaching Zone to neutralize the area and reverse the residual effects of the acidic solution injected during the leaching phase.
The recovered solution management phase involves separating the solution recovered from both the leaching phase and the neutralization phase into (i) mineralized precipitates and (ii) a neutralized treated solution.
As outlined in the Company‘s news release dated December 1, 2020, Denison has decided to adapt its plans for the Project to use a phased mining approach, which is expected to allow for the targeted extraction of the least capital-intensive reserves first, based on the grade and distribution of ore in various areas of the deposit. The supporting trade-off study provides for mining to occur over 5 phases.
Phase 1 of the deposit is estimated to contain approximately 22.2 million pounds U3O8 (37,242 tonnes at 27.1% U3O8, above a cut-off grade of 0.8% U3O8) in Probable mineral reserves. Based on current designs, the Company estimates approximately 6.6 million pounds U3O8 (7,717 tonnes at 39.2% U3O8, above a cut-off grade of 0.8% U3O8) in Probable mineral reserves are contained within the expected operating perimeter of the commercial scale wells in the 5-spot Test Pattern. Of these estimated Probable mineral reserves, the Company further estimates that 1.4 million pounds U3O8 (2,326 tonnes at 26.2% U3O8, above a cut–off grade of 0.8% U3O8) are contained within the operating perimeter of GWR-38, GWR-40, and GWR-41. These estimates are derived as a direct subset of those reported in the 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 (the “PFS Report”). The key assumptions, parameters and methods used to estimate the mineral reserves herein remain unchanged.
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 (operator) and JCU (Canada) Exploration Company Limited (“JCU“). Denison has an effective 95% ownership interest in Wheeler River (90% directly, and 5% indirectly through a 50% ownership in JCU).
The PFS was completed for Wheeler River in 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 PFS Report, a copy of which 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 EA process, which is on the critical path to achieving the project development schedule outlined in the PFS. While the EA process has resumed, 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.
Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, Canada. In addition to its effective 95% interest in the Wheeler River project, Denison’s interests in the Athabasca Basin include a 22.5% ownership interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill that is contracted to process the ore from the Cigar Lake mine under a toll milling agreement, plus a 25.17% interest in the Midwest Main and Midwest A deposits, and a 67.01% interest in the Tthe Heldeth Túé (“THT,” formerly J Zone) and Huskie deposits on the Waterbury Lake property. The Midwest Main, Midwest A, THT and Huskie deposits are each located within 20 kilometres of the McClean Lake mill.
Through its 50% ownership of JCU, Denison holds additional interests in various uranium project joint ventures in Canada, including the Millennium project (JCU 30.099%), the Kiggavik project (JCU 33.8118%) and Christie Lake (JCU 34.4508%). Denison’s exploration portfolio includes further interests in properties covering ~300,000 hectares in the Athabasca Basin region.
Denison is also engaged in post-closure mine care and maintenance services through its Closed Mines group, which manages Denison’s reclaimed mine sites in the Elliot Lake region and provides related services to certain third-party projects.
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