Denison Mines Wheeler River PEA: Pre-Tax NPV C$513 Million, IRR 20 Percent

Denison Mines (TSX:DML) released results of a preliminary economic assessment (PEA) for its 60 percent owned Wheeler River project. Highlights included a base case pre-tax IRR of 20.4 percent at current uranium prices (based on today’s long term contract price for uranium).
As quoted in the press release, highlights of the PEA included:

• Current uranium price: Base case scenario uses today’s long term contract price for uranium of US$44 per pound of U₃O₈, leading to a pre-tax IRR of 20.4% and a pre-tax Net Present Value (“NPV”) of CAD$513M (Denison’s share CAD$308M);
• Exposure to rising uranium price: Strong profitability at today’s price offers lower risk exposure to rising prices, as evidenced by a US$62.60 per pound U₃O₈ production case scenario resulting in a pre-tax IRR of 34.1% and pre-tax NPV of CAD$1,420M (Denison’s share CAD$852M);
• Strategic development plan: Designed to minimize risk, generate higher up-front margins, and reduce initial capital funding requirements – by development of the conventionally mined basement hosted Gryphon deposit first, followed by the unconformity hosted Phoenix deposit;
• Existing infrastructure & reduced risk: Decreased project risk, capex, and schedule by utilizing existing infrastructure in the eastern Athabasca Basin (including excess milling capacity, provincial highways, and the provincial power grid), justifying an 8% discount rate, and leading to an initial project CAPEX of CAD$560M (Denison’s share CAD$336M);
• Cash operating costs: The Gryphon deposit is expected to produce 40.7 million pounds U₃O₈, over a seven year mine life, at a cash operating cost of USD$14.28 per pound U₃O₈. The Phoenix deposit is expected to produce 64.0 million pounds U₃O₈, over a nine year mine life, at a cash operating cost of USD$22.15 per pound U₃O₈;
• Resource upside: Ability to incorporate potential resource growth at the Gryphon deposit, as demonstrated by the high-grade intersections previously reported from the winter 2016 exploration program (not included in the PEA), including drill holes WR-641, with 3.9% eU₃O₈, over 9.2 metres, and WR-633D1, with 1.7% eU₃O₈ over 7.6 metres including 6.3% eU₃O₈ over 1.7 metres (see Denison news release dated March 10, 2016).

Click here for the full press release.