Denison Mines Corp. (“Denison”) (TSX: DML) (NYSE American: DNN) is pleased to announce the award to Wood Canada Limited (“Wood”), part of the leading global consulting and engineering firm Wood PLC, of a contract for the completion of detailed design engineering for the In-Situ Recovery (“ISR”) mining project planned for Denison’s flagship Phoenix uranium deposit (“Phoenix”).
Phoenix and the nearby Gryphon uranium deposit (“Gryphon”) are part of the Wheeler River Uranium Project (“Wheeler River” or the “Project”), which is the largest undeveloped uranium mining project in the infrastructure-rich eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada. Denison has an effective 95% ownership interest in Wheeler River and is the Project operator.
An NI 43-101 Feasibility Study was completed by Wood in 2023 to evaluate the use of the ISR mining method at Phoenix (“Phoenix Feasibility Study”). The results of the Phoenix Feasibility Study reflected several years of technical de-risking efforts successfully completed by Denison and demonstrated very robust base-case after-tax (adjusted) economics – including a Net Present Value (“NPV”) of $1.56 billion (100% basis), an Internal Rate of Return (“IRR”) of 90.0%, and an NPV to initial capital cost ratio in excess of 3.7 to 1. The base-case in the Phoenix Feasibility Study assumed uranium selling prices in the range of USD$66.53 to USD$70.11 per pound U3O8. The current spot price for uranium is approximately USD$105 per pound U3O8, reflecting an increase of over 50% from the average of the base-case pricing assumptions used in the Phoenix Feasibility Study of USD$68.99 per pound U3O8.
Following completion of the Phoenix Feasibility Study, Denison’s Board of Directors approved the continuation of efforts to advance Phoenix towards a final investment decision and, in late 2023, the Management Committee of the Wheeler River Joint Venture approved a budget for the applicable 2024 expenditures. Detailed engineering design constitutes a significant portion of the work remaining to advance Phoenix to the point where a decision can be made to proceed to construction and, ultimately, production.
Kevin Himbeault, Denison’s Vice President of Operations, commented, “In recognition of Wood’s performance leading the Phoenix Feasibility Study, competitive pricing, and alignment with our bid evaluation process, we are pleased to announce the award of a detailed design engineering contract to Wood. Maintaining continuity through completion of the Phoenix Feasibility Study, front-end engineering design, and detailed design allows us to build on our combined knowledge and working relationship to deliver an engineering package that will ultimately support the construction and operation of the first ISR uranium mining operation in the Athabasca Basin.”
The scope of the facilities to be designed by Wood under this contract is extensive, including (i) site civil earthworks and distribution of utility piping throughout the main project site, (ii) electrical power distribution on site, (iii) surface piping and services for the mine wellfield, (iv) the process plant and related infrastructure, (v) operations complex, (vi) maintenance and related buildings, (vii) metallurgical and analytical laboratories, and (viii) site-wide communications systems.
Based on the currently anticipated scopes of work, the detailed design engineering contract with Wood is estimated to be up to approximately $16 million in value, with the scope of work planned to commence in Q1’2024 and to potentially continue into H1’2025.
