Denison makes US$74 million uranium purchase

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Denison Mines Corp. [DML-TSX; DNN-NYSE American] said Thursday April 1 that it has secured 2.5 million pounds of uranium concentrates at US$29.61 a pound at a total cost of US$74 million.

The purchase is an obvious bet that uranium prices will rise. It is also part of a previously announced project financing advancement and/or construction of the company’s flagship 90%-owned Wheeler River uranium project in Saskatchewan. All of the purchases were made on the uranium spot market, with delivery dates ranging from April 2021 to October, 2021.

“This material was secured amidst a tightening market, which has seen the spot price of uranium rise approximately 15% within the month of March, in response to various new sources of demand,” said Denison President and CEO David Cates.

Denison shares advanced on the news, rising 5.1% or $0.07 to $1.44 on volume of 1.49 million. The shares are trading in a 52-week range of $2.29 and 31 cents.

Denison is a uranium exploration and development company with interests focused in the Athabasca Basin region of northern Saskatchewan, including its 90%-owned Wheeler River project, which holds the high grade Phoenix and Gryphon uranium deposits (on the Wheeler River property).

Denison also owns a 22.5% interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill. The mill is currently processing ore from the Cigar Lake mine under a toll mining agreement.

Wheeler River is the largest undeveloped high-grade uranium project in the eastern portion of Saskatchewan’s Athabasca Basin. Proven and probable reserves at the site stand at 109.4 million pounds of U3O8. That includes 141,000 tonnes at 19.1% U3O8 or 59.7 million pounds in the Phoenix Zone, and 1.26 million tonnes at 1.8% U3O8 or 49.7 million pounds in the Gryphon Zone.

A NI 43-101 compliant pre-feasibility study was completed for Wheeler River in September, 2018 highlighted by the selection of the in-situ recovery mining method for the development of the Phoenix deposit, with an estimated average operating cost of US$3.33/lb of U3O8.

Dension said its physical uranium holdings will represent a sizeable asset for the company, with a current market value of US$78 million, which represents greater than one third of the expected US$290 million initial capital costs at Wheeler River.


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