Denison updates on Midwest uranium mine development

26 February 2008

Denison Mines has provided an update on the Midwest uranium mine project in Saskatchewan, Canada. The company expects some C$435 million ($440 million) to be spent on the project over the next three years.

Midwest 
South McMahon Lake (Image: Areva)
The partners in the Midwest project - Areva Resources Canada (69.16%), Denison Mines Corp (25.17%) and OURD Canada Co (5.67%) - announced in December the formal decision to proceed with development of the project.

The Midwest project is some 15 km west of the McClean Lake operation. The deposit was discovered in 1978 following ten years of exploration activity and is to be exploited by draining part of the Mink Arm of South McMahon Lake to construct an open pit mine. The open pit is anticipated to cover an area of some 45 hectares and to be up to about 215 metres deep. The mine is expected to produce some 16,300 tonnes U3O8 (13,850 tU). The ore will be transported by a dedicated road to the McClean Lake mill, some 15 km away, for processing.

 

The capital costs for the project are estimated at some C$435 million ($440 million), comprising C$75 million for a water treatment plant; C$115 million for de-watering wells; C$100 million for infrastructure; C$35 million for mine equipment; C$100 million for modifications to the McClean Lake mill; and, C$10 million in "miscellaneous capital." Denison said that it expects some C$50 million of these costs will be incurred in 2008. The remainder will be incurred in 2009 and 2010.

The regulatory approval process for Midwest is underway: The environmental assessment submission was made on 19 October 2007 and a decision on this is anticipated in the first half of 2009. Approval of the preparatory construction licence would be received in the first half of 2009. Midwest is to be operasted by Areva Resources, which already operates McClean Lake.

Subject to regulatory approvals, the site construction, including the haul road, water treatment and other facilities, is expected to begin in mid-2009. Stripping of the rock over the ore would begin in early 2010, with ore removal starting by September 2011 and continuing through to 2013. Denison expects that the processing of ore at the McClean Lake mill will begin in late 2011, with production at a rate of about 3630 tonnes U3O8 (3080 tonnes of uranium) per year until all the ore is fully processed by 2016 or 2017. Decommissioning and reclamation costs are estimated at C$55 million ($56 million). However, Denison said that a majority of the facilities would be used if other areas on the Midwest lease are developed.

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