Denison shares rise on key Saskatchewan approval

[Redator]

Canada’s first potential in-situ recovery (ISR) uranium project has moved one step closer to reality with Denison Mines (TSX: DML; NYSE: DNN) receiving its environmental assessment (EA) approval from Saskatchewan.

The Prairie province, where Denison has its main Phoenix/Wheeler River ISR project, has given Denison the green light to start developing the mine in the southeast Athabasca basin, the company said Tuesday. Phoenix is about 600 km north of Saskatoon.

“Denison’s announcement that it has received provincial environmental assessment approval for Wheeler River is a key positive for the stock as it progresses the project towards construction,” BMO Capital Markets analyst Alexander Pearce said in a note on Tuesday.

“The next major milestone is obtaining federal EA approval, with the company’s Canadian Nuclear Safety Commission hearing dates set for October and December this year,” potentially leading to a final investment decision in the first half of next year.

Largest undeveloped mine

Wheeler River is the largest undeveloped uranium project in the eastern Athabasca basin by tonnage and with the third highest grade behind Cameco’s (TSX: CCO; NYSE: CCJ) Cigar Lake and McArthur River mines. As an ISR mine using a well through which solution would be pumped to release uranium from ore, it could leave a lighter environmental footprint and at lower cost than an open pit. The company is targeting production to start in 2028.

Denison shares gained 6.7% to C$3 apiece on Tuesday morning in Toronto, for a market capitalization of C$2.69 billion. The stock has traded in a 12-month range of C$1.58 to C$3.45.

“We applaud the work of the provincial government to uphold the province’s rigorous environmental regulations, while simultaneously recognizing the important role that the natural resources sector can play in driving societal well-being,” Denison President and CEO David Cates said in a release.

“Completion of the provincial EA represents one of the final regulatory milestones necessary for Denison to commence construction of the Phoenix ISR mine, which is on track to become Canada’s next new large-scale uranium mine.”

EA process harmonization

Denison submitted its provincial EA late last year after it had completed several milestones of the federal regulatory process, part of its strategy to harmonize the federal and provincial EAs for Wheeler River. Last year it finished the CNSC’s technical review and the commission accepted its environmental impact statement. The federal and provincial EAs are now essentially the same and no further revisions are expected, Denison said.

Its next steps before starting construction at Phoenix are getting the provincial pollutant control facility permit and federal approval of the EA and licence to prepare the site. Those federal approvals are subject to CNSC public hearings scheduled for October and December, the final steps of the approval process for its EA and uranium mine licence.

Phoenix has a post-tax net present value of C$1.16 billion and an internal rate of return of 90% at capital costs of C$419 million, according to a 2023 feasibility study. Its mine life is estimated at 10 years. The project hosts proven reserves of 6,300 tonnes grading 24.5% uranium oxide (U₃O₈) for 3.4 million lb. of U₃O₈, and probable reserves of 212,700 tonnes at 11.4% U₃O₈ for 53.3 million lb. U₃O₈.