Denison Mines (DML-T) recently outlined a $6 million 2019 exploration program focused on diamond drilling its Wheeler River, Waterbury Lake and Hook-Carter uranium properties in Northern Saskatchewan’s Athabasca Basin.
Waterbury and Wheeler River are on the east side of the basin while Hook-Carter is on the west side, near Fission Uranium (FCU-T) Triple R uranium deposit and NexGen Energy (NXE-T) Arrow uranium deposit.
“What we’re doing now is being very selective on our exploration front,” Denison president and CEO David Cates explains “targeting projects that have the potential to deliver a meaningful discovery in the near term.”
The company plans to drill 13,500 metres across 23 holes at Wheeler, 7,300 metres across 18 holes at Waterbury and 3,900 metres across six holes at Hook-Carter.
It expects to spend $3.2 million at Wheeler this year, and has already begun drilling. Wheeler is a 90-10 joint venture with JCU Exploration, and as a result Denison funds 90% of all exploration at the project. It consists of two deposits, Phoenix and Gryphon, and several satellite targets.
“In 2018 we started stepping away from those deposits,” Denison vice president of exploration Dale Verran says. “In 2019 at Wheeler we’ll continue with regional exploration. We’ve identified some high priority target areas on the property.”
The company tabled a prefeasibility study for Wheeler in 2018’s third quarter that evaluated Wheeler’s Phoenix and Gryphon uranium deposits both separately and together.
According to the study, Phoenix could produce 6 million lb. uranium oxide per year over a 10 year mine life at US$3.33 per lb. uranium oxide cash operating costs — which would be the lowest cost of any uranium operation in the world. The company could achieve that cost through a technique called in-situ recovery (ISR) mining, which uses a solution to leach the mineral, in this case uranium, out of the host rock while it’s still in the ground. Its goal is to build the project’s mass, and then develop a pipeline of ISR deposits.
The method is both more environmentally friendly and cheaper than conventional mining methods; it eliminates shafts, pits, a mill and tailings, bringing a uranium rich solution to the surface while leaving everything the miner doesn’t want in the ground. Because the process is so passive, it’s also low on operating costs.
The technique involves a series of borehole wells. The miner injects a mining solution through one of the wells and, using pressures and the permeability of the rock, the solution migrates through the orebody, leaching a resource, until the miner recovers it through a recovery well. The miner then runs the solution through a small processing plant to precipitate out the uranium.
The technique requires a deposit with a permeable host like the sandstone at Phoenix. The company’s regional exploration at Wheeler is therefore focused on sandstone hosted targets.
“Our story’s really pivoted to being a developer in the past two years with the prefeasibility study at Wheeler,” Cates says. “If you look at our budgets over the last 2 years, you’ll see a real switch from exploration, spending around $15 million to now $6 million, but the budget’s going up on the development front. We’re spending $9.3 million for Wheeler on engineering and field tests for our mining method.”
Part of that includes permitting Phoenix. It also includes running a metallurgical pilot plant test and ISR wellfield tests to further test the sandstone’s permeability. It can then start modeling production scenarios.
Phoenix contains 59.7 million probable tonnes grading 19.1% uranium oxide for 141,000 tonnes uranium oxide.
Gryphon, hosted in the hard rock basement could produce 7.6 million lb. uranium oxide per year over 6.5 years at $15.21 per lb. uranium oxide cash operating costs. It contains 1.25 million probable tonnes grading 1.8% uranium oxide for 49.7 million lb. uranium oxide.
Together, the two deposits have a $755 million after-tax net present value at an 8% discount rate and a 32.7% after tax internal rate of return.
At Waterbury, Denison will spend $1.8 million on exploration. Denison holds a 65.92% interest in the project. Its partner, Korea Waterbury Uranium, has decided to dilute its interest in the project further and will not be funding 2019 exploration.
The company discovered Waterbury’s Husky uranium deposit in 2017. While drilling Husky in 2017 and 2018, it found northeast structures cutting through the deposit. That led to a new interpretation that the regional Midwest structure, which controls the company’s nearby Midwest uranium deposits on its Midwest property, continues up to the eastern side of Waterbury. The company tested its theory on the project’s GB trend in 2018 and found some basement hosted mineralization where the company believes the trend intersects the Midwest structure. In 2019 it intends to follow up on the GB trend and test other targets related to the Midwest structure.
Waterbury’s J zone contains 291,000 indicated tonnes grading 2% uranium oxide for 12.8 million lb. uranium oxide.
At Hook-Carter, Denison will spend $1.4 million to complete a first phase of reconnaissance along 7.5 km of the 15 km Patterson Lake Corridor interpreted at the project. The company started with nine reconnaissance holes in 2018 that tested geophysical targets. The property is a joint venture with ALX Uranium (AL-V). Denison owns 80% of the project and will fully fund 2019 exploration. It agreed to pay for ALX’s first $12 million in exploration expenditure when it acquired its ownership from ALX in 2016.
“What’s exciting about Hook Carter is our geophysics and initial drilling have shown that there are multiple target horizons within that Patterson corridor,” Verran says. “We’ve identified at least three, so we have probably 40 km of strike to test there.
“It’s elephant country for large deposits.”
The company will space its six Hook-Carter holes 1.2 km of strike length apart.
The company has a $385 million market capitalization. It generates some cash flow by managing Uranium Participation Corporation (U-T), a holding company that invests most of its assets in uranium.
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