Denison Mines (TSX: DML; NYSE: DML) has lifted the average grade of the Phoenix deposit by 11% and the contained pounds of uranium by 19% at its 60%-owned Wheeler River project in northern Saskatchewan.
Based on twenty-five new drill holes since the last update was published in January 2013, Wheeler's indicated resources have grown from 52.3 million lbs. of contained U308 to 70.2 million lbs. U308, based on 166,400 tonnes averaging 19.13% U308. Inferred resources add 1.1 million lbs contained U308 from 8,600 tonnes averaging 5.80% U308.
“It’s rare that one can continue to improve on already high grades with each successive estimate,” David Talbot of Dundee Capital Markets penned in a research note. “Already the world’s highest grade uranium resource, this second upgrade shows how well DML understands the geological setting and can maximize the return on its exploration spending.”
The high-grade mineralization at Phoenix occurs 400 metres below surface and shares many similarities, Denison says, with other unconformity related Athabasca uranium deposits such as the McArthur River mine, 37 km to the northeast, and the Cigar Lake mine, 80 km to the northeast.
Significantly, the June 17 resource update did not include the Gryphon zone, 3 km north of the Phoenix deposit, which was discovered in March and where a 14,000-metre (18-hole) summer drilling program is now underway. Two drills have been assigned primarily to extend Gryphon’s high-grade basement hosted mineralization.
The Gryphon zone is open along strike up and down dip, and previous drilling has returned juicy intercepts of 15.3% U308 over 4 metres and 21.2% U308 over 4.5 metres.
Denison is also planning a DC-resistivity survey for the northern strike extension of the Phoenix trend to aid drill hole targeting in the area.
Denison’s partners at Wheeler River are Cameco Corp. (TSX: CCO; NYSE: CCJ) with 30% and JCU (Canada) Exploration Company with 10%.
Commenting on the updated resource Colin Healey of Haywood Securities said it “continues to demonstrate the attractiveness of this world-class deposit with an ‘all-categories’ average resource grade (18.5% U308) orders of magnitude greater than the world average.”
Healey noted that the resource grade compares well with average proven and probable resource grades of deposits like McArthur River (15.76% U308) and Cigar Lake (18.30% U308).
Edward Sterck of BMO Capital Markets in London remarked that Denison’s “exploration methodology” is “continuing to pay dividends,” and while the current resource “lacks critical mass” with uranium spot prices hovering around US$28.25 per lb., the company nevertheless is “positioning itself well to potentially capitalize on forecast higher uranium prices in the future.”
At Raymond James in Vancouver, analyst David Sadowski recommended that investors “bolster positons on further confirmation of the project as a Tier 1 asset, resource growth potential (Phoenix and newly discovered Gryphon) and the company’s other scarce, strategic assets.”
Elsewhere in Saskatchewan Denison owns 22.5% of the McClean Lake joint venture, which includes several uranium deposits, and the McLean Lake uranium mill, one of the world’s largest uranium processing facilities. It also holds a 25.17% stake in the Midwest deposit and a 60% stake in the J Zone deposits, both within 20 km of the McClean Lake mill.
Outside Canada Denison owns 100% of the conventional heap leach Mutanga project in Zambia, 100% of the uranium-copper-silver Falea project in Mali, a 90% interest in the Dome project in Namibia, and an 85% interest in the in situ recovery projects held by the Gurvan Saihan joint venture in Mongolia.
News of the resource update sent Denison’s shares in Toronto up 4¢, or 2.9%, to $1.38 with nearly 3 million shares changing hands.
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