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Shortly after signing a letter of intent to acquire two uranium properties from International Enexco, Denison Mines announced the discovery of a new mineralized zone.
Denison Mines (TSX:DML) is flexing its acquisition muscles once again as it eyes International Enexco’s (TSXV:IEC) Athabasca Basin uranium assets.
The company announced late Wednesday a plan of arrangement to scoop up IEC’s two uranium properties, Mann Lake and Bachmann Lake, further cementing its position as a dominant landholder in Canada’s premier uranium hotspot.
Under the terms of the agreement, Denison will acquire all the issued and outstanding shares of IEC in exchange for 0.26 of a common share of Denison. IEC’s main uranium assets include a 30-percent interest in the Mann Lake exploration project and a 20-percent interest in the Bachmann Lake joint venture.
Mann Lake is located roughly 25 kilometers southwest of the McArthur River mine and, according to the company’s news release, is seated “on trend” between Cameco’s (TSX:CCO,NYSE:CCJ) Read Lake project and Denison’s 60-percent-owned Wheeler River project in the Eastern Athabasca Basin. Mann Lake is a joint venture project owned in majority by operator Cameco (52.5 percent), IEC (30 percent) and Areva (EPA:AREVA) (17 percent). The project has seen some recent drilling activity, with 11,000 meters of diamond drilling initiated in January for just under $3 million. To date, the project’s highlight is an intersection of 2.31-percent eU3O8 over 5.1 meters, including a 0.4-meter interval averaging 10.92-percent eU3O8.
Bachmann Lake, on other hand, is 80-percent owned by Denison and will slip into place as Denison’s highest-priority uranium exploration project on account of its location and the presence of strong conductors, a graphitic basement and sandstone alteration.
International Enexco’s 100-percent-owned Contact copper project will be spun out and sold to Full Metal Minerals (TSXV:FMM) in a separate transaction.
In a Cantor Fitzgerald research note, Rob Chang describes Denison’s latest news as moderately positive, commenting, “[t]he proposed transactions further strengthens the company’s already attractive portfolio and continues to make it the acquisition of choice for anyone looking to make a big push into the Basin, or looking to put a stranglehold on it.”
New discovery
As if an acquisition was not enough, Denison announced today the discovery of new high-grade mineralization that lies on trend with McArthur River. Gryphon, as the discovery has been named, is located 3 kilometers northwest of the Phoenix deposit, and was discovered during testing of the downdip extension of weak mineralization observed in two historic holes. Drill hole 556 produced an excellent result when it cut 4.6 meters grading 9.7-percent eU3O8; it is haloed by lower-grade mineralization.
Gryphon is entirely basement-hosted, and starts 691 meters downhole, which is 200 meters below the unconformity, and is wide open both updip and downdip along strike. The new discovery lies on the highly prospective “K Trend,” which so far has only seen widely spaced holes drilled. Half a dozen have tested around the Gryphon discovery.
Commenting on the discovery, Chang said that assuming a 15-meter-by-15-meter zone of influence, hole 556 on the Gryphon discovery represents somewhere in the area of 580,000 pounds of uranium.
David Sadowski, another Raymond James analyst, said Gryphon represents a “significant discovery that is likely to grow with additional drilling and as a large boost in the high-grade prospectivity of the corridor between Wheeler River and McArthur River.”
Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned.