Denison Mines Corp. (TSX: DML, NYSEAMERICAN: DNN) is on the threshold of a significant milestone as it prepares to commence construction on its flagship Phoenix In-Situ Recovery (ISR) uranium project. This initiative, located in northern Saskatchewan and part of the Wheeler River property, is anticipated to begin production in the near future. This project signifies a pivotal moment for Canada’s uranium industry, representing the first large-scale uranium mine to be established since the Cigar Lake operation.
As Denison’s president and CEO, David Cates, noted, after a year of substantial investment and progress, the company is ready to make a final investment decision and kick off construction activities. With positive regulatory milestones achieved and planning in place, the Phoenix project is well-positioned to transition into the construction phase.
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Regulatory Approval and Planning Progress
In recent months, Denison has reached critical regulatory milestones that have paved the way for construction readiness. The Canadian Nuclear Safety Commission (CNSC) recently wrapped up public hearings regarding the project’s environmental assessment and licensing requirements. Additionally, the Province of Saskatchewan has granted initial approval for early earthworks, marking a significant step forward for the project.
As the company gears up for construction, procurement planning is nearly finalized, with long-lead items, including electrical infrastructure, scheduled for timely shipment. Denison has updated its initial capital cost estimate for the Phoenix project to approximately US$437 million, reflecting adjustments for inflation, procurement progress, and engineering refinements. This represents a 20% increase compared to the estimates from the previous feasibility study. However, Denison assures stakeholders that no further increases are expected prior to the commencement of construction.
Project Overview and Construction Timeline
The Phoenix ISR project is designed to be completed within a two-year construction timeline. This project will not only support the existing fleet of Canadian nuclear reactors but also cater to future advanced reactor designs. The in-situ recovery method planned for use at Phoenix involves a process where uranium is dissolved underground and then pumped to the surface. This technique is responsible for over half of global uranium production but has not yet been utilized in Canada.
High-Grade Deposits and Joint Venture
The Phoenix project is home to high-grade uranium deposits, namely the Phoenix and Gryphon deposits, which were discovered in the past. This initiative is a joint venture between Denison and JCU Exploration Company Limited, with Denison acting as the operator. The project is positioned to play a significant role in meeting the increasing demand for uranium as more countries turn to nuclear energy.
Should all necessary approvals be obtained promptly, Denison aims to commence construction without delay, keeping the project on track for its first uranium output in the near future. This timeline is critical as it aligns with the projected increase in uranium demand driven by the global shift toward nuclear energy.
Financial Outlook and Economic Viability
Denison’s financial strategy reflects a solid balance sheet and a commitment to advancing the Phoenix project. The updated initial capital cost estimate includes contingency funds and reserves, ensuring the project remains financially viable. With a significant portion of equipment and materials costs already secured through committed contracts, Denison is confident in its ability to manage costs effectively.
Despite the increase in capital costs, the projected economic outcomes for the Phoenix project remain promising. The revised cost estimates indicate a robust after-tax net present value (NPV) and an attractive internal rate of return (IRR). This financial outlook underscores the project’s potential to yield substantial economic benefits while contributing to Canada’s goals of sustainable and responsible resource development.
In conclusion, the Phoenix project represents a crucial development in the Canadian uranium mining sector. As Denison Mines prepares to embark on construction, it is poised to set a new standard in uranium extraction through innovative methods and a commitment to responsible mining practices. The anticipated developments at Phoenix will not only fortify Denison’s position in the market but also play a pivotal role in meeting future energy demands.
