The Wheeler River uranium project includes two deposits – Phoenix and Gryphon. (Image: Denison Mines)
SASKATCHEWAN – Denison Mines Corp. of Toronto has the results of the pre-feasibility study for its flagship Wheeler River uranium project in the Athabasca Basin. The PFS considers simultaneous development of the Phoenix and Gryphon deposits.
The high grade Phoenix deposit is amenable to in situ recovery. A processing plant would be built at the Wheeler River site with an annual capacity of 6.0 million lb. of uranium oxide over a 14-year life. The pre-tax base case net present value (8% discount) will be $930.4 million, and the internal rate of return will be 43.3%. Initial pre-production capital expenditures of $322.5 million are anticipated. All-in cost will be $11.57 per lb. U3O8.
Conventional underground long hole methods will be used at the Gryphon deposit, and the ore shipped to the McClean Lake mill for processing. The initial capital costs will be $623.1 million to create a mine with a 6.5-year life and annual production of 7.6 million lb. of uranium oxide. Gryphon carries a pre-tax NPV (8%) of $560.6 million and an IRR of 32.2%. All in costs will be $29.67 per lb. U3O8.
The Wheeler River project is owned by Denison (63.3%), Cameco Corp. (26.7%), and JCU (Canada) Exploration Co. (10%). Since the owners are not subject to the same taxation rules, an after-tax NPV or IRR was not attempted.
Denison president and CEO David Cates noted in a release, “Based on an estimated production cost of US$3.33/lb U3O8 and relatively modest initial capital costs, the Phoenix operation is expected to have superior leverage to an anticipated recovery of the spot price of uranium – owing to the fact that the operation may not require a book of long term contracts to support a development decision. The Gryphon deposit is a perfect complement to Phoenix, as it is expected to supply additional low cost pounds, financed through cash flow from Phoenix, at a time when the uranium market is expected to be in a significant supply deficit.”
The probable reserve contains 109.4 million lb. uranium dioxide. The Phoenix portion is 59.7 million lb from 144,000 tonnes at 19.1%, and the Gryphon portion is 49.7 million lb. from 1.3 million tonnes at 1.8%.
For both deposits, the indicated resource (including reserves) is 132.1 million lb. U3O8 in 1.8 million tonnes at an average grade of 3.3%. The inferred resource contains 3.0 million lb. of uranium dioxide in 82,000 tonnes grading 1.7% U3O8.
Details of the PFS may be read at www.DenisonMines.com. Also take a couple minutes to watch the Wheeler River video.