TORONTO, Aug. 6, 2020 /CNW/ - Denison Mines
Corp. ("Denison" or the "Company") (TSX: DML) (NYSE
American: DNN) today filed its Condensed Consolidated
Financial Statements and Management's Discussion & Analysis
("MD&A") for the quarter ended June 30,
2020. Both documents can be found on the Company's website
at www.denisonmines.com or on SEDAR (at www.sedar.com) and
EDGAR (at www.sec.gov/edgar.shtml). The highlights provided below
are derived from these documents and should be read in conjunction
with them. All amounts in this release are in Canadian dollars
unless otherwise stated. View PDF version.
David Cates, President and CEO of
Denison commented, "We've seen several positive
trends develop in the uranium sector over the last several months.
Demand has remained relatively stable with nuclear power plants
answering the call to provide reliable and competitive base-load
energy during the pandemic. At the same time, COVID-19 related
supply curtailments and associated producer spot market buying has
put upward pressure on the uranium spot price – to the point where
the current spot price is approximately 10% higher than the
base-case selling price assumed in the Pre-Feasibility Study for
first production from Denison's proposed Phoenix In-Situ Recovery
('ISR') operation. While announcements have been made regarding the
resumption of certain curtailed uranium mines, this was always
expected by market participants. Regardless of the timing of these
restarts, we should not lose sight of how impactful even temporary
curtailments can be in a market that is actively drawing down
inventories and other secondary supplies as part of a cyclical
commodity correction – resulting in a permanent acceleration
towards sustained improvements to supply-demand
fundamentals.
From a Denison perspective, our recent results illustrate our
commitment to become the first company to bring the low-cost ISR
uranium mining method to the high-grade uranium deposits of the
Athabasca Basin region. In
June 2020, we reported a significant
milestone in the de-risking of the ISR mining method at
Phoenix – announcing that an
independent specialist firm concluded that a hydrogeologic model,
developed based on actual field tests carried out at Phoenix in 2019, had produced 'proof of
concept' for the application of the ISR mining method at
Phoenix. With this validation
in-hand, and with a series of new health and safety protocols in
place to ensure a safe work environment amidst the pandemic, we
were pleased to also announce the resumption of ISR field testing
activities at Phoenix. The 2020
ISR field program is designed to minimize the disruption created by
the pandemic to the overall project schedule by collecting
additional information necessary to support the completion of a
future Feasibility Study.
Additionally, the Company announced the successful completion
of an $8 million equity financing and
encouraging results from an internal Concept Study evaluating the
use of the ISR mining method at the Company's J Zone deposit. Taken
together, the second half of 2020 promises to be very active for
Denison, with several catalysts on the horizon – including the
completion of ISR field testing at Phoenix, an exploration program designed to
delineate additional uranium resources at Phoenix, and a Preliminary Economic Assessment
for the J Zone deposit, all of which are planned and funded as part
of the Company's current Outlook for 2020."
HIGHLIGHTS
- Achieved independent "Proof of Concept" for application of
In-Situ Recovery ('ISR') mining method at the Phoenix uranium deposit ('Phoenix')
In June 2020, Denison announced
that the hydrogeologic model developed by Petrotek Corporation
('Petrotek'), for the high-grade Phoenix deposit, produced demonstration of
"proof of concept" for the application of the ISR mining method at
Phoenix, with respect to potential
operational extraction and injection rates (see Denison press
release dated June 4, 2020). The
hydrogeologic model was developed based on the data collected from
the ISR field test completed in 2019.
- Resumed ISR field testing activities at Phoenix with commencement of 2020 ISR field
program
In July 2020, Denison announced
the successful resumption of ISR field testing activities with the
commencement of the Company's 2020 ISR field program ('2020 Field
Test') focused on the Phoenix
deposit. The 2020 Field Test is intended to build additional
confidence in the results of the hydrogeologic model developed for
the deposit by Petrotek, and to support further field work expected
to be required for the completion of a future Feasibility Study
('FS'). In order to ensure the Company's operations comply with all
applicable health and safety guidelines associated with the
COVID-19 pandemic, all operating procedures at the Company's
Wheeler River site have been reviewed and adapted to incorporate
physical distancing and enhanced hygiene protocols, as well as
special travel protocols designed by Denison for northern
Saskatchewan.
- Completed conceptual mining study ('Concept Study')
evaluating the ISR mining method for the J Zone uranium deposit ('J
Zone') and initiated Preliminary Economic Assessment
('PEA')
In July 2020, Denison announced
the successful completion of an internal Concept Study examining
the potential future development of J Zone using the ISR mining
method. J Zone is located on the Waterbury Lake property, which is
owned by Denison (66.71%) and Korea Waterbury Uranium Limited
Partnership (33.29%). Based on the results from the Concept Study,
the Company has decided to initiate the preparation of a PEA, which
is expected to be completed during the second half of 2020. The
cost of completing the PEA is included in the Company's current
estimate of exploration and evaluation expenditures in the Outlook
for 2020.
- Successfully completed $8
million equity financing to provide funding for business
activities into 2021
In April 2020, Denison
successfully completed a public offering of 28,750,000 common
shares at a price of USD$0.20 per
common share for gross proceeds of $8,041,000 (USD$5,750,000), which included the full exercise
of the overallotment option of 3,750,000 common shares. The
estimated net proceeds of $6,878,000
are expected to be used to fund the Company's business activities
for the remainder of 2020 and into 2021.
About Wheeler River
Wheeler River is the largest undeveloped uranium project in the
infrastructure rich eastern portion of the Athabasca Basin region, in northern
Saskatchewan and is a joint
venture between Denison (90% and operator) and JCU (Canada) Exploration Company Limited (10%). The
project is host to the high-grade Phoenix and Gryphon uranium deposits,
discovered by Denison in 2008 and 2014, respectively, estimated to
have 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).
A pre-feasibility study ('PFS') was completed in late 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 net present
value ('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 was 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 NI 43-101 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. A copy of
this report 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.
Given recent social, financial and market disruptions, Denison
has suspended certain activities at Wheeler River, including the EA
program, which is on the critical path to achieving the project
development schedule outlined in the PFS. Given the uncertainty
associated with the duration of suspension, 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.
About Denison
Denison Mines Corp. was formed under the laws of Ontario and is a reporting issuer in all
Canadian provinces. Denison's common shares are listed on the
Toronto Stock Exchange (the 'TSX') under the symbol 'DML' and on
the NYSE American exchange under the symbol 'DNN'.
Denison is a uranium exploration and development company with
interests focused in the Athabasca
Basin region of northern Saskatchewan,
Canada. The Company's flagship project is the 90% owned
Wheeler River Uranium Project. Denison's interests in
Saskatchewan also include a 22.5%
ownership interest in the McClean Lake Joint Venture ('MLJV'),
which includes several uranium deposits and the McClean Lake
uranium mill, which is currently processing ore from the Cigar Lake
mine under a toll milling agreement, plus a 25.17% interest in the
Midwest deposits and a 66.71% interest in the J Zone and Huskie
deposits on the Waterbury Lake property. The Midwest, J Zone and
Huskie deposits are located within 20 kilometres of the McClean
Lake mill. In addition, Denison has an extensive portfolio of
exploration projects in the Athabasca Basin region.
Denison is engaged in mine decommissioning and environmental
services through its Closed Mines group (formerly Denison
Environmental Services), which manages Denison's Elliot Lake reclamation projects and provides
post-closure mine and maintenance services to a variety of industry
and government clients.
Denison is also the manager of Uranium Participation Corporation
('UPC'), a publicly traded company listed on the TSX under the
symbol 'U', which invests in uranium oxide in concentrates
('U3O8') and uranium hexafluoride
('UF6').
Technical Disclosure and Qualified Person
The disclosure of scientific and technical information regarding
Denison's material properties in the MD&A was prepared by, or
reviewed and approved by David
Bronkhorst, P.Eng., the Company's Vice President Operations,
a Qualified Person in accordance with the requirements of NI
43-101.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Certain information contained in this news release constitutes
'forward-looking information', within the meaning of the applicable
United States and Canadian
legislation concerning the business, operations and financial
performance and condition of Denison.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as 'plans', 'expects',
'budget', 'scheduled', 'estimates', 'forecasts', 'intends',
'anticipates', or 'believes', or the negatives and/or variations of
such words and phrases, or state that certain actions, events or
results 'may', 'could', 'would', 'might' or 'will be taken',
'occur', 'be achieved' or 'has the potential to'.
In particular, this news release contains forward-looking
information pertaining to the following: exploration, development
and expansion plans and objectives, including the results of, and
estimates and assumptions within, the PFS, the plans and objectives
for ISR and the related field and hydrogeological testing results,
models, "proof of concept", plans and objectives; evaluation
activities and plans for a PEA for the J Zone deposit; the
suspension of EA activities and anticipated results of such
suspension; the impact of COVID-19 on Denison's operations; the
estimates of Denison's mineral reserves and mineral resources;
plans for any FS, and any work to be undertaken in respect thereto;
expectations regarding Denison's joint venture ownership interests;
expectations regarding the continuity of its agreements with third
parties; and its interpretations of, and expectations for, nuclear
power and uranium supply, demand and related market factors.
Statements relating to 'mineral reserves' or 'mineral resources'
are deemed to be forward-looking information, as they involve the
implied assessment, based on certain estimates and assumptions that
the mineral reserves and mineral resources described can be
profitably produced in the future.
Forward looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, level of activity,
performance or achievements of Denison to be materially different
from those expressed or implied by such forward-looking statements.
For example, the results and underlying assumptions and
interpretations of the PFS as well as the ISR field test and
hydrogeological test programs discussed herein may not be
maintained after further testing or be representative of actual
conditions within the applicable deposits. In addition, Denison may
decide or otherwise be required to extend the EA and/or otherwise
discontinue testing, evaluation and development work, including a
FS at Wheeler River or PEA for J Zone at Waterbury Lake, if it is
unable to maintain or otherwise secure the necessary approvals or
resources (such as testing facilities, capital funding, etc.).
Denison believes that the expectations reflected in this
forward-looking information are reasonable, but no assurance can be
given that these expectations will prove to be accurate and results
may differ materially from those anticipated in this
forward-looking information. For a discussion in respect of risks
and other factors that could influence forward-looking events,
please refer to the factors discussed in Denison's Annual
Information Form dated March 13, 2020
under the heading 'Risk Factors'. These factors are not, and should
not be construed as being exhaustive.
Accordingly, readers should not place undue reliance on
forward-looking statements. The forward-looking information
contained in this news release is expressly qualified by this
cautionary statement. Any forward-looking information and the
assumptions made with respect thereto speaks only as of the date of
this news release. Denison does not undertake any obligation to
publicly update or revise any forward-looking information after the
date of this news release to conform such information to actual
results or to changes in Denison's expectations except as otherwise
required by applicable legislation.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Mineral Resources and
Probable Mineral Reserves: This MD&A may use the terms
'measured', 'indicated' and 'inferred' mineral resources.
United States investors are
advised that while such terms have been prepared in accordance with
the definition standards on mineral reserves of the Canadian
Institute of Mining, Metallurgy and Petroleum referred to in
Canadian National Instrument 43-101 Mineral Disclosure Standards
('NI 43-101') and are recognized and required by Canadian
regulations, these terms are not defined under Industry Guide 7
under the United States Securities Act and, until recently, have
not been permitted to be used in reports and registration
statements filed with the United States Securities and Exchange
Commission ('SEC'). 'Inferred mineral resources' have a great
amount of uncertainty as to their existence, and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or other
economic studies. United States
investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States
investors are also cautioned not to assume that all or any part of
an inferred mineral resource exists, or is economically or legally
mineable. In addition, the terms "mineral reserve", "proven
mineral reserve" and "probable mineral reserve" for the purposes of
NI 43-101 differ from the definitions and allowable usage in
Industry Guide 7. Effective February
2019, the SEC adopted amendments to its disclosure rules to
modernize the mineral property disclosure requirements for issuers
whose securities are registered with the SEC under the Exchange Act
and as a result, the SEC now recognizes estimates of "measured
mineral resources", "indicated mineral resources" and "inferred
mineral resources". In addition, the SEC has amended its
definitions of "proven mineral reserves" and "probable mineral
reserves" to be "substantially similar" to the corresponding
definitions under the CIM Standards, as required under NI 43-101.
However, information regarding mineral resources or mineral
reserves in Denison's disclosure may not be comparable to similar
information made public by United
States companies.
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SOURCE Denison Mines Corp.