Denison completed a prefeasibility study for the project in 2018, which forecast that the flagship Phoenix deposit would produce 6 million lbs uranium oxide (U3O8) at 19.1% U3O8 across a 10-year mine life. Wheeler River also contains a second deposit called Gryphon, which-although regarded as a first-tier deposit by Denison-is expected to trail the development of Phoenix as part of a staged development plan.
Denison, which owns 95% of Wheeler River, intends to mine Phoenix using in-situ
David Cates, company president and CEO, Denison Mines
recovery (ISR), a common uranium mining method which has been deployed in Kazakhstan, the United States and Australia but never before in Canada, according to David Cates, the company's president and CEO.
Evaluating the feasibility of the ISR method has been the subject of a multi-year process of field and laboratory testing, culminating in what Denison calls a Feasibility Field Test, or FFT-which involved the injection of an acidic mining solution into a previously installed ISR test pattern in the Phoenix deposit. Earlier this year, Denison reported receipt of regulatory approvals for the FFT from the province of Saskatchewan and the Canadian Nuclear Safety Commission, and on October 17, the company announced the successful recovery of uranium-bearing solution from the field test. Cates called the accomplishment an "historic moment for uranium mining in Canada," adding that the test showcased Denison's industry leadership in bringing the low-cost ISR mining method to the high-grade uranium deposits of the Athabasca Basin.
"In the last five years we've done significant technical work to prove this mining method will be successful at Phoenix. We have installed many hydrogeological testing wells into the deposit, as well as a full-scale five-spot commercial-scale well pattern located within our planned first production area. We have performed in-depth hydrogeologic testing using our test wells, to make sure our flow models reflect actual performance from the field. In 2021, we performed a tracer test to ensure that dissolved solids were travelling between wells as predicted by our models," Cates said.
The FFT consists of three phases. The first involved the injecting of lixiviant (mining solution) into the test area of the underground ore body. Given the successful results of the FFT, the injection has ceased, and Denison is now preparing to transition to the neutralisation phase, which it expects to complete before the end of 2022. This phase involves the recovery of the remainder of the leached mineralised solution from the test area, with the purpose of demonstrating is the ability to return the Phoenix deposit to acceptable environmental conditions. The final phase of the FFT, which is expected to commence in the first half of 2023, involves separating the recovered solution into mineralised precipitates and a neutralised treated solution.
In terms of other milestones, Denison recently announced the submission of a draft environmental impact statement (EIS), which is a critical milestone in the joint federal and provincial environmental assessment process Denison started for the project in 2019. Denison is also working on completing an update of the Wheeler River prefeasibility study-bringing the Phoenix deposit to a Feasibility Study level-during the first half of 2023.
Cates commented, "based on our efforts to date, we continue to believe that a Phoenix ISR uranium mine will be positioned amongst the lowest cost uranium mines in the world - in competition with the lowest cost mines in Kazakhstan and the large and high-grade incumbent mines in the Athabasca Basin."
As for capital cost inflation, Cates acknowledged that this was a problem for the entire mining sector but expressed confidence that it wouldn't hold Denison back, as the project is expected to have comparatively low initial capital costs owing to the nature of the ISR mining method-which doesn't rely on costly and time consuming shaft sinking or open pit excavation to reach the ore body, and has a simplified processing plant design without the need for conventional milling circuits or tailings disposal. He added that the company was well capitalised with more than C$225 million ($165 million) in working capital and investments on the balance sheet, including more than C$50 million cash and 2.5 million lbs of yellowcake uranium inventory acquired at a low price in 2021 that has appreciated in value while in storage at two North American conversion facilities.
"We're bullish on the [uranium] price, obviously, and we believe our physical uranium could fund a significant portion of the capital cost for Phoenix when the time comes. Whether or not we're selling the material into the open market, or placing it in utility contracts, or using it as collateral for debt financing, we're very pleased to have this item on our balance sheet as we approach a development decision".
"Phoenix's economics were favourable even at much lower uranium prices, so much so that we've been in active development since the 2018 prefeasibility study during a period of under-investment for much of the sector. You can't buy time in our industry, so the ability to have advanced the project over the past several years is a tremendous competitive advantage for Denison."
Aside from Wheeler River, Denison has a stake in three other projects at various stages of development in the Athabasca Basin. These are Waterbury (Denison 67.01%, Korea Waterbury Uranium Limited Partnership, 32.99%), Midwest (Denison, 25.17%, Orano Canada, 74.83%) and McLean Lake (Denison 22.5%, Orano Canada, 77.5%).
Denison has identified Waterbury's Tthe Heldeth Túé ("THT") deposit as another potential candidate for ISR mining like Phoenix. This deposit used to be called the "J Zone" deposit, and was renamed in 2020 based on consultation with local Indigenous groups. The deposit is also well known as the western extension of Rio Tinto's former Roughrider deposit. Speaking briefly about Waterbury, Cates commented "previous thinking around THT was that it would be a natural fit for eventual co-development with Roughrider. Since we have advanced our efforts on ISR mining we have really changed our mind on THT and realise that it is actually the best part of the THT-Roughrider deposit in that it is the only part that is amenable to ISR mining, which has dramatically improved the economics of potential development."
Building on the Company's leadership in ISR mining in the Basin, Denison is also working together with Orano Canada to evaluate the potential use of ISR at Midwest-a project which has an approved EIS for open pit mining but was not previously advanced due to high costs.
In October 2022, Denison took another step forward in its Athabasca-region projects when it signed its third agreement with local First Nations and Indigenous communities in which it committed to advancing exploration activities in a manner that respects Indigenous rights, advancing reconciliation with Indigenous peoples, and providing economic opportunities and other benefits to the Athabasca communities.
View from inside the coverall building at the Phoenix deposit during our Feasibility Field Test (FFT)