Denison Mines Corp. [DML-TSX] is raising US$10 million from a bought deal financing and said proceeds will be used to fund evaluation and environmental assessment work at the company’s Wheeler River uranium project in Saskatchewan.
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.
Denison also has a 25.17% stake in the Midwest deposits, a 66.71% interest in the J Zone and Huskie deposits on the Waterbury Lake property. Those deposits are located within 20 km of the McClean Lake mill.
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. It is 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 per pound of U3O8.
Denison said an underwriting syndicate led by Cantor Fitzgerald Canada Corp. and Haywood Securities Inc. has agreed to buy 27.03 million common shares of the company for US$0.37 per share on a bought deal basis. Gross proceeds are expected to be US$10 million.
In addition, Denison has granted the underwriters an overallotment option to purchase an additional 4.0 million shares at the issue price for 30 days after the closing date of the offering, a move that is expected to add an additional US$1.5 million to the proceeds.
The offering is expected to close by October 14, Denison said in a press release that came after the close of trading on North American markets on October 8, 2020
On Thursday, Denison shares declined on the news, falling 19.7% or 12 cents to 49 cents on active volume of 2.5 million. The shares are trading in a 52-week range of 75 cents and 23.5 cents.
Meanwhile, Denison said exploration activities continue at Wheeler River with a current focus on the discovery of additional high-grade uranium deposits following years of delineation drilling at both Phoenix and Gryphon.
Denison recently announced the resumption of In-Situ Recovery field testing activities at Wheeler River. It said those activities are focused on the Phoenix deposit and is intended to build additional confidence in results of an independent hydrogeologic model developed for the deposit and to support further field work that is expected to be required for the completion of a future feasibility study.