EX-99.1
2
a2012012020-11dmcdenisona.htm
PRESS RELEASE DATED DECEMBER 1, 2020
a2012012020-11dmcdenisona
Exhibit 99.1
Denison Mines
Corp.
1100 – 40
University Ave
Toronto, ON M5J
1T1
www.denisonmines.com
PRESS
RELEASE
DENISON
ANNOUNCES DECISION TO ADOPT
FREEZE WALL DESIGN FOR ISR MINING AT
PHOENIX
Toronto, ON – Dec. 1,
2020. Denison Mines Corp. (“Denison” or the
“Company”) (DML: TSX, DNN: NYSE American) is pleased to
announce the completion of a trade-off study assessing the merit of
adopting a freeze wall design as part of the in-situ recovery
(“ISR”) mining approach planned for the high-grade
Phoenix uranium deposit (“Phoenix”), at the
Company’s 90% owned Wheeler River Uranium Project ("Wheeler
River" or the "Project"). Based on the results of the trade-off
study, discussed below, a freeze wall design has the potential to
offer significant environmental, operational, and financial
advantages compared to the freeze cap (or freeze
“dome”) design previously planned for the project and
included in the project’s Pre-Feasibility Study
(“PFS”) (see news release dated Sept. 24,
2018).
Accordingly,
the Company has decided to adapt its plans for the Project to use a
freeze wall in future Project design and environmental assessment
efforts. The trade-off study (see details below) highlights the
following significant benefits of a freeze wall
design:
●
Enhanced environmental
design: The freeze wall design
provides full hydraulic containment of the ISR well field by
establishing a physical perimeter around the mining area, which
will extend from the basement rock underlying Phoenix to surface
– enhancing environmental protection in the area of the ISR
mining operation, thereby minimizing potential environmental
impacts during the life of the operation, while still establishing
a defined area for decommissioning and
reclamation;
●
Lower technical complexity and
operational risks: A freeze
wall is expected to be installed using existing and proven vertical
or angled diamond drilling methods, rather than the directional /
horizontal drilling approach proposed to establish a freeze cap.
The use of conventional diamond drilling methods is expected to
substantially decrease the technical complexity associated with
project construction. Similarly, the adaptation of previous plans
(described in the PFS), to remove the cap design is expected to
significantly reduce operational risks by eliminating the potential
intersection of freeze holes during the installation of future ISR
wells – as the ISR wells will no longer have to pierce a
freeze cap to access the mining horizon;
●
Expected reduction in initial
capital costs, with phased mining approach: The freeze cap design contemplated the use of a
small number of large horizontal freeze holes to encapsulate the
entire Phoenix deposit at depth prior to first production. In
contrast, the freeze wall design, which consists of vertical /
angled freeze holes, provides the flexibility for a phased mining
approach that requires only a limited initial freeze wall
installation to commence mining – with additional ground
freezing occurring throughout the life of the mine in sequential
phases. Preliminary designs for mining of the Phoenix deposit,
using a freeze wall approach, now call for five phases, thus
reducing the Project’s upfront capital requirements and
initial ground freezing time. The planned phases are expected to
target the least capital-intensive areas of the deposit first
(higher grades, smaller footprint) to defer capital costs as much
as possible and simultaneously shorten the Project construction
schedule;
●
Strengthened project
sustainability: The predominant
drilling method used in the freeze wall design is conventional
diamond drilling. This existing and proven method is widely
employed and established in northern Saskatchewan. Accordingly, it
is anticipated that Denison will be able to leverage the existing
skilled work force in the region to increase business and
employment opportunities for residents of Saskatchewan’s
north.
This press release constitutes a “designated news
release” for the purposes of the Company’s prospectus
supplement dated November 13, 2020 to its short form base shelf
prospectus dated April 2, 2020.
David Bronkhorst, Denison’s Vice President
Operations, commented, “The
adoption of the freeze wall design for ISR mining at Phoenix is
potentially transformational for the Project. The phased approach
allows for targeted mining of select areas of the deposit, thus
potentially allowing for a meaningful reduction in upfront capital
costs and project construction timelines. The new configuration,
whereby freeze holes are drilled parallel to and surrounding the
ISR wells, also alleviates a number of technical and environmental
complexities by using established diamond drilling techniques,
reducing the potential for unplanned interactions between the ISR
mining operation and the environment, and also effectively
eliminating the possibility of intersections of freeze well
infrastructure during the installation of ISR mining
wells.”
The
freeze wall design for Phoenix incorporates knowledge acquired
through the development of the hydrogeologic model for Phoenix (see
news release dated June 4, 2020) and builds on Denison’s
efforts to assess a freeze wall design as part of the Preliminary
Economic Assessment (“PEA”) for the Waterbury Lake
Property (“Waterbury”) (see news release dated Nov. 17,
2020).
Trade-Off Study Background
As
part of its ongoing efforts to advance Phoenix towards a future
feasibility study, Denison completed a detailed freeze design
trade-off study comparing the risks and benefits of the freeze cap
design included in the Wheeler River PFS to a freeze wall design
similar to that outlined in the Waterbury PEA. The study confirmed
that the freeze wall design has the potential to offer
significantly lower overall Project risk and complexity in a number
of areas evaluated – including health and safety,
environment, regulatory acceptance, community relations, and
technical feasibility.
The
key difference between the freeze wall and freeze cap
configurations at Phoenix is the containment geometry. The freeze
wall encompasses the deposit vertically from the surface down to
the impermeable basement rocks, and the mining solution is
contained to the area in and above the deposit (Figure 1 and Figure
2), keeping it isolated from the surrounding groundwater. The
freeze cap geometry described in the PFS provided a horizontal
layer of containment directly above the deposit, providing
localized containment in the immediate area around the ore body,
but does not extend the full length of the ISR wells to
surface.
A
freeze wall is expected to be installed using conventional diamond
drilling techniques – an established and low risk drilling
method frequently used in the Athabasca Basin. By comparison, the
freeze cap requires the use of specialized horizontal drilling
techniques which, while successfully used in the oil and gas
industry in southern Saskatchewan, increase the technical
complexity of the Project.
The
technical feasibility of the freeze wall approach has been further
validated by key qualified persons in the areas of hydrogeology,
freeze containment, commercial drilling, and metallurgy, as
discussed below.
Phased Mining Approach
The
trade-off study identified a key opportunity associated with the
flexible design of a freeze wall – allowing for the freeze
wall to be installed in phases and to adopt a phased mining
approach at Phoenix. In a phased mining approach, only a limited
initial freeze wall is required to support first production, with
the subsequent expansion of the freeze wall perimeter allowing for
additional mining phases to be brought into
production.
The
phased approach is expected to allow for the targeted extraction of
the least capital-intensive reserves first, based on the average
ore grade in various areas of the deposit. The trade-off study
provides for mining to occur over 5 phases, as outlined in Table 1
and Table 2 below, and illustrated in Figure 1 and Figure 2. This
approach is expected to match the overall mine production schedule
of the PFS.
Table 1. Freeze Wall Phased Mining Approach
Phase
1
Phase
2
Phase
3
Phase
4
Phase
5
Total
Reserves (% of
total)*
36%
26%
14%
15%
9%
100%
Expected Life
(months)
43
31
17
19
11
121
*Note: These amounts are estimates and
projections only and do not include Phoenix Zone B2 reserves of
133,000 lbs U3O8.
The aggregate reserves, and many of the assumptions and
qualifications related thereto, as well as the mine plan associated
with the declared reserves are set forth in the Wheeler River
PFS.
Table 2. Freeze Wall Holes Drilled Per Phase
Phase
1
Phase
2
Phase
3
Phase
4
Phase
5
Total
Expected (# of
holes)
57
41
54
52
118
322
Expected
Meterage
24,500
17,600
23,200
22,400
50,700
138,400
The freeze wall construction requirements for
Phase 1 include 57 vertical freeze holes with 24,500 metres of
diamond drilling. For comparison, the PFS model for the freeze cap
included 30 horizontal freeze holes installed during construction
for an overall drilling meterage of 32,700 m, using much more
expensive horizontal drilling methods. With the freeze wall design,
subsequent mining phase areas would be established prior to
completion of mining in the previous phase area to provide
uninterrupted mine production. Current plans for the freeze wall
design excludes the reserves included in the PFS for Phoenix Zone
B2 (illustrated in Figure 2), which contains approximately 133,000
lbs U3O8
in reserves per the PFS –
representing 0.2% of the total reserves for Phoenix outlined in the
PFS. This
expected change is driven by the estimated costs and other
assumptions set forth in the PFS, plus the estimated incremental
cost of an expansion of the freeze wall, rendering mining in this
area uneconomic.
As
is evident from the tables above, the freeze wall phased approach
is anticipated to minimize initial capital and construction
timeline requirements for the Project by spreading out the freeze
wall construction over the life of mine. Only the Phase 1 freeze
wall is required during initial construction to achieve first mine
production. A reduced initial freeze wall also has a reduced
initial freeze plant capacity requirement. As the freeze plant is
modular in design, the freezing capacity can also be deferred over
the life of mine. The projected lower initial capital requirements
associated with the phased freeze wall approach are expected to
have positive impacts on the economics of the Project.
Technical Considerations
The
freeze wall approach at Phoenix is expected to reduce technical
complexity and operational risk during construction and the life of
mine operations.
During
construction, the freeze wall design makes use of established
diamond drilling methods and ground freezing techniques currently
in use at various existing mining operations in the Athabasca Basin
region. This drilling method and design has a significantly lower
technical risk profile than the horizontal drilling required as
part of the freeze cap design included in the Wheeler River PFS
– which is expected to result in greater certainty around
both costs and schedule during the critical Project construction
phase.
During
operations, there is lower risk of unplanned interaction between
ISR wells and freeze holes with the freeze wall design when
compared to the freeze cap in the Wheeler River PFS. As the freeze
wall holes are vertical and situated around the perimeter of the
mining zone, there is minimal risk of the subsequent drilling of
ISR wells intersecting and damaging a freeze hole. The freeze wall
design is also much more flexible as it can be installed in phases
over the mine life. This could allow for adjustments in parameters
such as freeze hole spacing, ISR well patterns, and mine planning
based on actual operating results. This approach also allows for
the potential to extend the mine life to include additional uranium
mineralization outside of the existing mine plan (and extents of
the previously planned freeze cap) that may be discovered
subsequent to initial construction of the mine.
Freeze Modelling
As
part of the trade-off study, third party expert assessments were
conducted to validate the freeze wall design by Newmans
Geotechnique Inc. (“Newmans”). The assessment
successfully confirmed the viability of adopting the freeze wall
configuration with a phased approach over the life of
mine.
In
addition to validating the freeze wall design, freeze modelling
also identified an opportunity to reduce the initial refrigerant
capacity of the freeze plant, compared to the estimates included in
the Wheeler River PFS, due to the phased approach of freeze wall
development, with refrigeration capacity being added as required
throughout the life of operations.
Hydrogeologic Modeling
The
freeze wall and freeze cap designs both offer a form of
hydrogeologic containment for the ISR mining solution that is
required to move through the host rock at the mining horizon as
part of the use of the ISR mining method at Phoenix. The validity
of the freeze wall design was evaluated by Petrotek Corporation
("Petrotek") as part of the trade-off study. The comprehensive
hydrogeologic groundwater model developed for the Project (see
press release dated June 4, 2020) was updated to assess potential
hydrogeologic and operational impacts of the use of a freeze wall
compared to the freeze cap. The key revisions to the hydrogeologic
model were the placement of a vertical freeze wall, the removal of
the horizontal freeze cap, and the inclusion of the full sequence
of sandstone units above the deposit (no longer isolated by the
freeze cap). All other parameters, including ISR operating rates,
were unchanged between the original and revised
models.
The
resultant modelling and flow-path analysis indicated that, under
the simulated operating conditions, the maximum height that
injected fluids will move above the ore zone horizon is generally
less than 1 metre. As this is an important environmental and
operational consideration, additional sensitivity analysis was
conducted to evaluate the potential for upward migration of mining
solutions during ISR operations. Horizontal and vertical hydraulic
conductivity values in the model were increased by a factor of 10
to test the sensitivity of the model to extreme circumstances,
which lead to a maximum upward migration of mining solution above
the ore zone horizon between 11 and 13 metres. In both operational
scenarios the mining solutions are fully contained within the
freeze wall perimeter.
Environmental Considerations
The
objective of a freeze wall is the same as the freeze cap, as
outlined in the Wheeler River PFS, which is to protect the
surrounding environment from interactions with the ISR mining
process – by providing containment of the ISR mining solution
through the creation of a physical barrier between the mining
horizon and surrounding environment. Compared to the freeze cap,
the freeze wall extends the containment area beyond the area
immediately surrounding the ore zone, from deposit depth up to
surface – thereby providing physical containment around the
entire ISR well field from well screen (at depth) to well head (at
surface). Accordingly, in the event of an ISR well failure at any
depth along the well, any released mining solutions will be
contained by the freeze wall perimeter. This is expected to provide
enhanced environmental protection for the Project.
About Wheeler River
Wheeler River is the largest undeveloped uranium project in the
infrastructure rich eastern portion of the Athabasca Basin region,
in northern Saskatchewan – including combined Indicated
Mineral Resources of 132.1 million pounds U3O8 (1,809,000 tonnes
at an average grade of 3.3% U3O8), plus combined
Inferred Mineral Resources of 3.0 million pounds U3O8 (82,000 tonnes at
an average grade of 1.7% U3O8). The project is
host to the high-grade Phoenix and Gryphon uranium deposits,
discovered by Denison in 2008 and 2014, respectively, and is a
joint venture between Denison (90% and operator) and JCU (Canada)
Exploration Company Limited (10%).
The scientific and technical information in this press release,
with respect to the Project, is supported by the Wheeler River PFS.
While potential advantages of the adaptation of the design of
freeze containment have been described herein, the freeze wall
design is not expected to constitute a material change to the
information in the PFS.
The PFS was completed for Wheeler River in late 2018, considering
the potential economic merit of developing the Phoenix deposit as
an ISR operation and the Gryphon deposit as a conventional
underground mining operation. Taken together, the project is
estimated to have mine production of 109.4 million pounds
U3O8 over a 14-year
mine life, with a base case pre-tax NPV of $1.31 billion (8%
discount rate), Internal Rate of Return ("IRR") of 38.7%, and
initial pre-production capital expenditures of $322.5 million. The
Phoenix ISR operation is estimated to have a stand-alone base case
pre-tax NPV of $930.4 million (8% discount rate), IRR of 43.3%,
initial pre-production capital expenditures of $322.5 million, and
industry leading average operating costs of US$3.33/lb
U3O8.
The PFS is prepared on a project (100% ownership) and pre-tax
basis, as each of the partners to the Wheeler River Joint Venture
are subject to different tax and other obligations.
Further details regarding the PFS, including additional scientific
and technical information, as well as after-tax results
attributable to Denison's ownership interest, are described in
greater detail in the NI 43-101 Technical Report titled
"Pre-feasibility Study for the Wheeler River Uranium Project,
Saskatchewan, Canada" dated October 30, 2018 with an effective date
of September 24, 2018. A copy of this report is available on
Denison's website and under its profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
Denison suspended certain activities at Wheeler River during 2020,
including the formal Environmental Assessment ("EA”) process,
which is on the critical path to achieving the project development
schedule outlined in the PFS. On November 9, 2020, Denison
announced its decision to resume the formal EA process for the
Project in January 2021. The Company is not currently able to
estimate the impact to the project development schedule outlined in
the PFS, and users are cautioned against relying on the estimates
provided therein regarding the start of pre-production activities
in 2021 and first production in 2024.
About Denison
Denison is a uranium exploration and development company with
interests focused in the Athabasca Basin region of northern
Saskatchewan, Canada. In addition to the Wheeler River project,
Denison's Athabasca Basin exploration portfolio consists of
numerous projects covering over 250,000 hectares. Denison's
interests in the Athabasca Basin also include a 22.5% ownership
interest in the McClean Lake joint venture ("MLJV"), which includes
several uranium deposits and the McClean Lake uranium mill, which
is currently processing ore from the Cigar Lake mine under a toll
milling agreement, plus a 25.17% interest in the Midwest and
Midwest A deposits, and a 66.90% interest in the The Heldeth
Túé (“THT”, formerly J Zone) and Huskie
deposits on the Waterbury Lake property. Each of Midwest, Midwest
A, THT and Huskie are located within 20 kilometres of the McClean
Lake mill.
Denison is engaged in mine decommissioning and environmental
services through its Closed Mines group (formerly Denison
Environmental Services), which manages Denison's Elliot Lake
reclamation projects and provides post-closure mine care and
maintenance services to a variety of industry and government
clients.
Denison is also the manager of Uranium Participation Corp., a
publicly traded company which invests in uranium oxide and uranium
hexafluoride.
For more information, please contact
David
Cates
(416) 979-1991
ext 362
President and
Chief Executive Officer
Sophia
Shane
(604)
689-7842
Investor
Relations
Follow Denison on
Twitter
@DenisonMinesCo
Qualified Persons
The results and interpretations contained in this release related
to the hydrogeological model for Phoenix were prepared by Mr. Errol
Lawrence, PG (Senior Hydrogeologist), and Mr. Aaron Payne, PG
(Senior Hydrogeologist), at Petrotek, each of whom is an
independent Qualified Person in accordance with the requirements of
NI 43-101.
The results and interpretations contained in this release related
to ground freezing components and modeling for Phoenix were
prepared by Mr. Greg Newman, BE (mechanical) M.Sc. (geotechnical),
P. Eng. (SK, NWT), at Newmans Geotechnique Inc., who is an
independent Qualified Person in accordance with the requirements of
NI 43-101.
The technical information contained in this release has been
reviewed and approved by Mr. David Bronkhorst, P.Eng, Denison's
Vice President, Operations, who is a Qualified Person in accordance
with the requirements of NI 43-101.
Certain information contained in this news release constitutes
‘forward-looking information’, within the meaning of
the applicable United States and Canadian legislation concerning
the business, operations and financial performance and condition of
Denison.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as ‘plans’,
‘expects’, ‘budget’,
‘scheduled’, ‘estimates’,
‘forecasts’, ‘intends’,
‘anticipates’, or ‘believes’, or the
negatives and/or variations of such words and phrases, or state
that certain actions, events or results ‘may’,
‘could’, ‘would’, ‘might’ or
‘will be taken’, ‘occur’, ‘be
achieved’ or ‘has the potential to’.
In particular, this news release contains forward-looking
information pertaining to the following: the results of the
trade-off study and its underlying assumptions and the
Company’s intentions with respect thereto; the duration and
scope of impacts of the COVID-19 pandemic and affiliated
operational adjustments; the availability of third party experts
and services; the results of the PFS and expectations with respect
thereto; development and expansion plans and objectives, including
plans for a feasibility study; and expectations regarding its joint
venture ownership interests and the continuity of its agreements
with its partners.
Forward looking statements are based on the opinions and estimates
of management as of the date such statements are made, and they are
subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance
or achievements of Denison to be materially different from those
expressed or implied by such forward-looking statements. For
example, the results of the freeze wall trade-off study discussed
herein may not be maintained after further testing or be
representative of actual mining plans for the Phoenix deposit after
further design and studies are completed. In addition, Denison may
decide or otherwise be required to discontinue testing, evaluation
and development work at Wheeler River if it is unable to maintain
or otherwise secure the necessary resources (such as testing
facilities, capital funding, regulatory approvals, etc.) or
operations are otherwise affected by COVID-19 and its potentially
far-reaching impacts. Denison believes that the expectations
reflected in this forward-looking information are reasonable but no
assurance can be given that these expectations will prove to be
accurate and results may differ materially from those anticipated
in this forward-looking information. For a discussion in respect of
risks and other factors that could influence forward-looking
events, please refer to the factors discussed in Denison’s
Annual Information Form dated March 13, 2020 or subsequent
quarterly financial reports under the heading ‘Risk
Factors’. These factors are not, and should not be construed
as being exhaustive.
Accordingly, readers should not place undue reliance on
forward-looking statements. The forward-looking information
contained in this news release is expressly qualified by this
cautionary statement. Any forward-looking information and the
assumptions made with respect thereto speaks only as of the date of
this news release. Denison does not undertake any obligation to
publicly update or revise any forward-looking information after the
date of this news release to conform such information to actual
results or to changes in Denison's expectations except as otherwise
required by applicable legislation.
Cautionary Note to United States
Investors Concerning Estimates of Measured, Indicated and Inferred
Mineral Resources and Probable Mineral Reserves: This press
release may use the terms 'measured', 'indicated' and 'inferred'
mineral resources. United States investors are advised that while
such terms have been prepared in accordance with the definition
standards on mineral reserves of the Canadian Institute of Mining,
Metallurgy and Petroleum referred to in Canadian National
Instrument 43-101 Mineral Disclosure Standards ('NI 43-101') and
are recognized and required by Canadian regulations, these terms
are not defined under Industry Guide 7 under the United States
Securities Act and, until recently, have not been permitted to be
used in reports and registration statements filed with the United
States Securities and Exchange Commission ('SEC'). 'Inferred
mineral resources' have a great amount of uncertainty as to their
existence, and as to their economic and legal feasibility. It
cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the
basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of
measured or indicated mineral resources will ever be converted into
mineral reserves. United States investors are also cautioned not to
assume that all or any part of an inferred mineral resource exists,
or is economically or legally mineable. In addition, the terms
"mineral reserve", "proven mineral reserve" and "probable mineral
reserve" for the purposes of NI 43-101 differ from the definitions
and allowable usage in Industry Guide 7. Effective February 2019,
the SEC adopted amendments to its disclosure rules to modernize the
mineral property disclosure requirements for issuers whose
securities are registered with the SEC under the Exchange Act and
as a result, the SEC now recognizes estimates of "measured mineral
resources", "indicated mineral resources" and "inferred mineral
resources". In addition, the SEC has amended its definitions of
"proven mineral reserves" and "probable mineral reserves" to be
"substantially similar" to the corresponding definitions under the
CIM Standards, as required under NI 43-101. However, information
regarding mineral resources or mineral reserves in Denison's
disclosure may not be comparable to similar information made public
by United States companies.
Figure 1: Proposed Phoenix Wellfield and Freeze Wall Containment
Configuration.
Plan view of Phoenix freeze wall at surface and long section view
of Phoenix freeze wall from A to B. Long section C to D indicates
the ore zone horizon cut away for Figure 2
Figure 2. Isometric View of Phoenix Freeze Wall at Ore
Level.
C to D indicates the ore zone horizon cut away from the Phoenix
long section in Figure 1.