a2006042020-06dmcpetrotek
|
Exhibit
99.1
Denison Mines
Corp.
1100 – 40
University Ave
Toronto, ON M5J
1T1
www.denisonmines.com
|
PRESS
RELEASE
DENISON ANNOUNCES INDEPENDENT “PROOF OF
CONCEPT”
ACHIEVED FOR APPLICATION OF ISR MINING METHOD AT
PHOENIX
AND DETAILS OF 2020 ISR FIELD PROGRAM
Toronto, ON – June 4,
2020. Denison Mines Corp. (“Denison” or the
“Company”) (DML: TSX, DNN: NYSE American) is pleased to
announce that the hydrogeologic model developed by Petrotek
Corporation (“Petrotek”), for the high-grade Phoenix
uranium deposit (“Phoenix), produced demonstration of
“proof of concept” for the application of the In-Situ
Recovery (“ISR”) mining method at Phoenix, with respect
to potential operational extraction and injection rates. The
hydrogeologic model was developed based on the data collected from
the ISR field test completed in 2019 (“2019 Field
Test”) (see press release dated December 18, 2019). Based on
the positive results from the hydrogeologic model, Denison is also
pleased to announce the details of its plans for the continuation
of ISR field testing in 2020, within Phoenix, at the Company's 90%
owned Wheeler River Uranium Project ("Wheeler River"), located in
northern Saskatchewan, Canada.
David Bronkhorst, Denison’s Vice President
Operations, commented, “Petrotek applied a
rigorous process of calibration to several numerical models
developed based on hydrogeologic data collected from 19 test wells
installed into the Phoenix deposit during the 2019 Field Test.
Based on this site-specific data, the hydrogeologic model allowed
for the simulation of an ISR wellfield including a total of 18
extraction wells and 33 injection wells across Test Area 1 and Test
Area 2 of Phoenix. Based on these simulations, Petrotek concluded
that the results demonstrated ‘proof of concept’ for
the use of ISR mining at Phoenix. This result represents a
significant milestone in the ongoing de-risking of the use of the
ISR mining method at Phoenix. Our plans for additional field
testing in 2020 are expected to build on our success from 2019,
further confirm the hydrogeological model completed by Petrotek,
and prepare for field tests in future years, which are expected to
support a feasibility study – including a potential in-ground
lixiviant test or ISR demonstration.”
Hydrogeologic Modeling
Denison
engaged Petrotek to facilitate the design and implementation of ISR
field testing at Phoenix in 2019. Petrotek is an independent
qualified technical specialist firm with unique expertise in the
evaluation and field operations of subsurface fluid flow and
injection projects, with experience ranging from feasibility
studies to facility operation. The firm has more than 20 years of
experience in the ISR uranium mining industry and has provided
consulting services to each of the ISR uranium miners in the United
States.
Petrotek
and Denison designed the 2019 Field Test for the unique geological
characteristics of Phoenix. The testing program aimed to collect
hydrogeological data in Test Area 1 and Test Area 2 of Zone A at
Phoenix. Data acquired from the 2019 Field Test was collected and
analyzed to support the development of an integrated
hydrogeological model to better define areas of the deposit
contributing to fluid flows and ultimately to facilitate future ISR
wellfield designs necessary to support a Feasibility Study
(“FS”) and the Environmental Assessment
(“EA”) process.
Highlights
of the hydrogeologic modeling completed by Petrotek include the
following:
●
Numerical
groundwater flow models were developed using site-specific data to
evaluate the hydraulic responses of the ore zone aquifer observed
during hydrogeologic field testing conducted at Phoenix in
2019;
●
Multiple
models were constructed to address the lateral and vertical
variability in hydraulic conductivity (a measure of permeability)
observed at the site;
●
Modeling was
limited to the physical flow of water through the groundwater
system and did not address any geochemical reactions of injected
fluids within the aquifer matrix or native
groundwater;
●
The
hydrogeologic model developed for Phoenix consisted of five layers,
including one layer for the overlying Athabasca sandstone above the
ore zone, one layer for the underlying paleo weathered
unmineralized basement below the ore zone, and three subdivided
layers within the ore zone;
●
The uppermost
layer of the ore zone represents the upper clay unit, the middle
layer represents the more permeable friable unit, and the lower
layer represents the lower clay unit. The combined thickness of the
three layers is six metres with the thickness of the middle layer
simulated in multiple models. A two metre interval was assumed to
be the most representative of the overall in-situ conditions of the
deposit, with the resultant model being referred to as the
“2M” model.;
●
Each model was calibrated to the actual test
results from the 2019 Field Test, such that the “head”
(defined as a specific measurement of liquid pressure vertically above a reference point) changes resulting from simulations in the models
were similar to the observed changes in the actual
tests;
●
The
calibrated numerical models were then used to estimate hydraulic
responses of the ore zone aquifer under conditions representative
of ISR operations. Single well pattern simulations were run under a
variety of scenarios, including typical 5-spot and 7-spot well
patterns, variable distances between wells (5 to 15 metres), and
variable pumping and injection rates;
●
Results of
the single well pattern simulations were used to further
investigate the feasibility of ISR for uranium extraction by
developing a wellfield simulation using the 2M model and 5-spot
well patterns placed across Test Area 1 and Test Area 2 of Phoenix
at approximate 10 metre spacings between wells – including a
total of 18 extraction / recovery wells and 33 injection
wells;
●
Test Area 1
extraction wells were simulated at 5 gallons per minute
(“GPM”) or less, and Test Area 2 extraction wells were
simulated at 7.5 GPM or less, with total extraction for the
simulation at 105.5 GPM and total injection of 105.4 GPM for a
nearly balanced operational flow;
●
The
simulation was carried out within test area boundaries, reflecting
the proposed freeze walls that are planned to encapsulate the ISR
wellfield. No attempts were made to optimize operational rates with
respect to sweep efficiency or simulated lixiviant travel
time;
●
As expected,
there was large variability in travel times from injection well to
extraction well, with the average flow path travel time estimated
at 55 days, with 71% of flow paths being completed in fewer than 55
days;
●
A 180-day
simulation was completed with approximately 80% of the injected
fluids estimated to be captured during the simulation
period.
While
the results of these simulations (including well patterns, spacing
and flow rates) should be viewed as preliminary, and should not be
considered wellfield plans or projections of actual operations,
Petrotek’s Interim Hydrogeologic Report has drawn the
following important conclusions:
●
The modelling
results generally provide a demonstration of “proof of
concept” for application of ISR to the Phoenix ore body, with
respect to potential operational extraction and injection rates;
and
●
With positive
results associated with the various permeability measures and
models reported to date, the further adjustment of operational
parameters (e.g. well spacing, injection pressures, uranium
recoveries), along with the engineered enhancement of in-situ
permeability (such as MaxPERF drilling - see press release dated
December 18, 2019), should allow for potentially significant
optimization of the hydrogeologic model in the future.
2020 ISR Field Test Program
During
the summer and fall months of 2020, Denison plans to collect
additional hydrogeological data as part of an ISR field test
program (“the 2020 Field Test”) at Phoenix. The 2020
Field Test is designed to further evaluate and de-risk the ISR
mining conditions present at Phoenix, by supplementing the
extensive dataset acquired as part of the 2019 Field
Test.
Hydrogeological
data collected as part of the 2020 Field Test is expected to build
additional confidence in the Company’s understanding of the
fluid pathways within Test Area 1 and Test Area 2, to further
validate the hydrogeological model completed by Petrotek, and to
prepare for field tests in future years, which are expected to
support a FS – including a potential in-ground lixiviant test
or ISR demonstration.
The
2020 Field Test is expected to utilize existing Commercial Scale
Wells (“CSWs”) and Small Monitoring Wells
(“SMWs”), installed as part of the 2019 Field Test, as
well as mineralized and non-mineralized drill core recovered from
the 2019 Field Test.
Key
elements of the 2020 Field Test include:
●
Additional pump/injection tests within Test Area 1 and Test Area 2
of the Phoenix deposit
o
To confirm
the long-term stability of engineered permeability enhancement
tunnels; and
o
Collection of
data from additional injection points not previously
tested.
o
Collection of
data from various horizons within and above the Phoenix ore zone to
characterize the baseline hydrogeochemistry in the deposit area.
Understanding of the hydrogeochemistry is expected to be necessary
to support the planning and permitting of a potential field test in
future years for an in-ground lixiviant test or ISR
demonstration;
o
Groundwater
sampling, in conjunction with future column leach test work, is
expected to provide data needed to conduct reactive transport
models (i.e. models that involve kinetically dissolving a mineral
in a groundwater system). These models may be used to determine the
overall dissolution rate of the ore (primarily uraninite) and the
flow of the lixiviant through the formation, including residence
time, to estimate overall mill feed rate.
o
Collection of
additional matrix permeability data from drill core previously
recovered from within Test Area 1 and Test Area 2, to support
further refinement of hydrogeological models with an enhanced
understanding of both large- and small-scale fluid flow
pathways.
o
Collection of
data to aid in evaluating the potential utility of certain
permeability enhancement techniques.
The
Company previously announced a decision to temporarily suspend the
environmental assessment process for the Wheeler River project and
other discretionary activities due to the significant social and
economic disruption that has emerged as a result of the COVID-19
pandemic and the Company's commitment to ensure employee safety,
support public health efforts to limit transmission of COVID-19,
and exercise prudent financial discipline. The work related to the
2020 Field Test is not part of the suspended activities, and is
included in the Company’s evaluation budget contained within
the current outlook and operating plan for 2020 (see the
Company’s Management Discussion and Analysis for the period
ended March 31, 2020).
The
Company previously indicated that field activities in 2020 could
include the expansion of ISR field test work into Test Area 3 and
Test Area 4 of Phoenix Zone A; however, since then, field testing
of the MaxPERF Drilling Tool validated the potential to normalize
the impact of geologic variations throughout the orebody by
mechanically increasing access to existing permeability through the
installation of lateral penetration tunnels from a CSW. Based on
this success, the Company has decided to focus its testing efforts
on Test Area 1 and Test Area 2 with the potential to carry out, in
future years, an in-ground lixiviant test or ISR demonstration
within the existing test areas (rather than expanding testing
efforts to Test Area 3 and Test Area 4). This approach is expected
to substantially de-risk the application of the ISR mining method
at Phoenix and to support a future FS.
Operational
planning for the 2020 Field Test is currently in progress, with
significant consideration being given to public health guidelines
and industry best practices associated with operating a remote
mining camp site in northern Saskatchewan amidst the COVID-19
pandemic. In addition to camp operating procedures and physical
distancing protocols, transportation and travel protocols are being
developed in consultation with various Indigenous and
non-Indigenous communities situated between the Wheeler River
project site and Saskatoon.
The
Company is committed to ensuring that the site is a safe operating
environment for its staff and contractors and that the
Company’s field activities do not compromise the health and
safety of the residents of northern Saskatchewan. Despite the
Company’s current intentions, it is possible that the program
may not advance as planned, or as described above, owing to the
social and economic disruptions associated with the COVID-19
pandemic, which are outside of the control of the Company –
for example, the availability of Company or contractor staff to
attend to the site, Provincial or local travel restrictions, and
changing public health guidelines.
In-Situ Recovery Mining Method
Denison
selected the ISR mining method for the future mining of Phoenix in
the Pre-Feasibility Study (“PFS”) completed for Wheeler
River in 2018 (see press release dated October 30, 2018). In an ISR
mining operation, a mining solution is injected into the ore zone
through a series of injection wells, and then dissolves the uranium
as it travels through the ore zone, before the uranium bearing
solution (“UBS”) is then pumped back to surface via a
series of recovery wells. Once on surface, the UBS is sent to a
surface processing plant for the chemical separation of the
uranium. Following the uranium removal, the mining solution is
reconditioned and returned to the wellfield for further production.
The ISR mining method accounts for a significant portion of uranium
mine production globally and is generally considered the lowest
cost uranium mining method in the world – owing to the fact
that the method eliminates the surface disturbances and costs
associated with physically removing ore and waste from the ground,
as well as the tailings treatment and storage, that are normally
associated with underground or open pit mining
operations.
The
geologic setting of the uranium ore body and the ability of the
mining solution to travel through the orebody (permeability) is an
important element of an ISR mining operation. Accordingly, much of
Denison’s work in 2019 was focused on enhancing its
assessment of the permeability of Phoenix through the completion of
a series of ISR field tests – the positive preliminary
results of which have been previously released (see press releases
dated December 18, 2019 and February 24, 2020), and the data from
which was incorporated into the hydrogeologic modelling described
above.
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%).
A 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.
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 66.57% interest in the J Zone and Huskie
deposits on the Waterbury Lake property. Each of Midwest, Midwest
A, J Zone and Huskie are located within 20 kilometres of the
McClean Lake mill.
Denison is also 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
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(416) 979-1991
ext 362
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President and
Chief Executive Officer
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Sophia
Shane
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689-7842
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Investor
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Follow Denison on
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@DenisonMinesCo
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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 other technical information contained in this release has been
reviewed and approved by Mr. David Bronkhorst, P.Eng, Denison's
Vice President, Operations, or Mr. Dale Verran, MSc, P.Geo,
Pr.Sci.Nat., Denison's Vice President, Exploration, each of whom is
a Qualified Person in accordance with the requirements of NI
43-101.
Cautionary Statement Regarding Forward-Looking
Statements
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 2019
Field Test; the hydrogeologic model and its underlying assumptions;
the 2020 Field Test, including its intended scope and timing,
objectives and evaluation interpretations; the duration and scope
of impacts of the COVID-19 pandemic and affiliated operational
adjustments; the current and continued use and availability of
third party technologies for testing; 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 2019 Field Test, hydrogeologic model
and/or 2020 Field Test discussed herein may not be maintained after
further testing or be representative of actual conditions within
the Phoenix deposit.
In addition,
Denison may decide or otherwise be required to discontinue the 2020
Field Test or other 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.