Robust economic assessment for Wheeler River

05 April 2016

Denison Mines Corp is to begin a pre-feasibility study at the Wheeler River project in Canada's Athabasca Basin after a newly published preliminary economic assessment (PEA) found "robust" economics for a proposed underground mining operation based on current uranium prices.

The PEA considers the development of the Gryphon deposit followed by the Phoenix deposit, producing a total of 104.8 million pounds U3O8 (40,311 tU) over a 16-year mine life: Gryphon is expected to produce 40.7 million pounds U3O8 over seven years at a cash operating cost of $14.28 per pound U3O8, with Phoenix expected to produce 64.0 million pounds U3O8 over nine years at a cost of $22.15 per pound U3O8.

Although Phoenix is the higher grade of the two deposits, with grades of up to 19.14% U3O8, Gryphon is expected to be the more profitable because it is hosted in basement rock and can be developed and mined using conventional practices. The uncomformity-hosted mineralization at Phoenix will require more sophisticated development methods including ground freezing, and will have to be extracted by remote methods because of the high uranium grades and associated radiation levels. Developing the deposits in sequence - first Gryphon and then Phoenix - is therefore expected to minimize risk, generate higher up-front margins and reduce initial capital funding requirements, the company said.

Mined material would be processed at the McClean Lake mill, which is 22.5%-owned by Denison, 70% by Areva Resources Canada and 7.5% by OURD (Canada). The mill is located about 160 kilometres to the northeast of the Wheeler River property and currently processes ore produced from Cameco's Cigar Lake operation under a toll-milling arrangement. The mill is being upgraded and is expected to have excess capacity of up to 6 million pounds U3O8 per year after Cigar Lake reaches its full 18 million pounds U3O8 per year production in 2017.

"We are very pleased with the positive results of the PEA - particularly being able to illustrate that the project has potential to generate robust economics based on today's uranium price and with our current resource base," Denison president and CEO David Cates said. He added that the PEA supported Denison's decision to continue exploration at the property and to advance immediately to a pre-feasibility study.

Denison recently reiterated its intention to focus on its activities in the Athabasca Basin, having sold its Mongolian assets in 2015.

Wheeler River is a joint venture between Denison (60%), Cameco (30%) and JCU (Canada) Exploration (10%).

Researched and written
by World Nuclear News