Spurred on by the positive results of its prefeasibility study (PFS) for the Wheeler River project, Canadian uranium company Denison Mines on Tuesday announced that C$10.3-million would be spent on advancing the Athabasca basin project in 2019.
The budget, approved by the Wheeler River joint venture in which Denison has 90% ownership, will be used to initiate the environmental assessment process, as well as engineering studies and related programmes required to advance the high-grade Phoenix deposit as an in-situ recovery (ISR) mining operation.
The initiation of the environmental assessment process and studies designed to ultimately support a feasibility study, illustrated the company’s commitment to achieving the project development timeline outlined in the PFS, said Denison president and CEO David Cates.
The company plans to complete the feasibility study by the end of 2020 and to have its final environmental approvals in hand by 2022 or 2022, at which point a definitive development decision will be announced.
The PFS assumes that initial construction activities will start in 2021 and that first production will be achieved from the Phoenix operation by mid-2024.
The Phoenix deposit will operate for ten years, producing a total of 59.7-million pounds of uranium oxide (U3O8), with yearly output estimated at six-million pounds. ISR is considered the world's lowest-cost uranium mining method and using it for the Phoenix deposit yields an estimated operating cost of C$4.33/lb ($3.33/lb) of U3O8.
The Wheeler project also contains a proposed Gryphon operation, is seen as complementary to Phoenix and is designed as an underground mining operation, using a conventional long hole mining approach with processing of mine production assumed at Denison's 22.5%-owned McClean Lake mill. The Gryphon deposit will operate for 6.5 years delivering an average of 7.6-million pounds of U3O8. Its operating costs are estimated at $11.70/lb, which is a relatively high operating margin at current uranium prices.
The Phoenix operation is estimated to have a base case pre-tax net present value (NPV) of $930.4-million, at 8% discount rate, representing the large majority of the project's overall estimated pre-tax NPV of $1.31 billion – which includes the self-funding development of the Gryphon operation from cash-flows generated by the Phoenix operation.