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General Market Commentary
Denison begins $6 million drill campaign in Saskatchewan
Denison Mines (TSX: DML; NYSE: DNN) 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’s (TSX: FCU; US-OTC: FCUUF) Triple R uranium deposit and NexGen’s (TSX: NXE; NYSE: NXE) Arrow uranium deposit.
“What we’re doing now is being very selective on our exploration front,” Denison president and CEO David Cates explains in an interview with The Northern Miner, “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.