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TABLE OF CONTENTS May 12 - 18, 2014 Volume 100 Number 13 - 0 comments

Denison's Wheeler River set to grow

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VANCOUVER — Uranium may be in the doldrums right now, but Denison Mines’ (TSX: DML; NYSE-MKT: DNN) Wheeler River uranium project in the Athabasca basin is nonetheless becoming one of the world’s best resource projects — of any commodity.

Denison has just wrapped up its latest exploration program in Saskatchewan, which included 27 holes at Wheeler River. Eleven of those probed the Phoenix A deposit, where the resource comprises a blanket of lower-grade mineralization wrapped around a richly mineralized uranium oxide (U3O8) core.

Denison’s goal at Wheeler River had been to expand the high-grade core into the blanket. Mission accomplished: The core is now wider in multiple areas after assays returned even higher grades than initial downhole gamma probe data suggested.

Hole 548 delivered the highlight of the program with 36.83% U3O8 over 6.5 metres, but other results are also impressive: Hole 545 cut 3.5 metres of 24.47% U3O8, hole 550 hit 4 metres of 29.32% U3O8, hole 559 returned 3 metres of 15.99% U3O8 and hole 539 included 5 metres of 13.12% U3O8.

“More spectacular numbers from Wheeler’s Phoenix A,” said Raymond James analyst David Sadowski. “Though already the world’s highest grading undeveloped uranium deposit — and indeed, one of the richest pre-development projects of any commodity globally — we believe Denison’s success at extending high-grade zones into areas previously modelled, as low grade portends a significant rise in grade and contained metal in a revised resource estimate expected in June.”

Haywood Securities analyst Colin Healey had a similar reaction to the news from Wheeler River.

“We see significant positive implications for the Phoenix A deposit, as DML has intersected high-grade mineralization in areas previously modelled as part of the lower-grade shell,” Healey wrote. “These intersections represent real potential to add pounds.”

The resource at Wheeler River stands at 164,100 measured and indicated tonnes grading 16.6% U3O8, for 59.9 million lb. contained U3O8. Phoenix A’s 53.7 million lb. of U3O8 at an average grade of 17.4% represent the lion’s share of that resource. The rest sits in the smaller Phoenix B deposit.

High-grade hits at Phoenix A were by no means Denison’s only exploration success. While drilling at Phoenix A, Denison punched 16 holes into other targets on the property. One is now a discovery: three holes into the Gryphon zone returned healthy intercepts of U3O8 in the basement rocks known to carry uranium in the Athabasca.

While Denison awaits assay results for the Gryphon holes, the company released gamma probe results in March, including 12.6 metres grading 3.7% U3O8 and 4.2 metres grading 17.3% U3O8.. Gryphon is located 3 km north of Phoenix in a similar geological setting.

Wheeler River is in the heart of the Athabasca’s most active area: it lies between the McArthur River mine and the Key Lake mill complex. Denison owns 60% of the project and is operator. Cameco (TSX: CCO; NYSE: CCJ) holds a 30% stake and Japan’s JCU owns the rest.

Denison recently ran exploration programs at nine other properties in the eastern Athabasca. Another two projects saw work from joint-venture partners.

At Waterbury Lake — which is next to the Roughrider deposit that Rio Tinto (NYSE: RIO; LSE: RIO) acquired by taking over Hathor Exploration in 2012 — Denison tested two targets. The Oban target, located 3 km north of known mineralization at the J zone, returned weak uranium in two holes. To the west, the Discovery Bay target produced one weakly mineralized drill intercept.

Even though the intercepts were short and low grade, Denison says it is encouraged because the mineralization encountered is associated with graphitic fault zones and strong hydrothermal alteration, and both targets remain open along strike.

Rigs at the Hatchet Lake project returned a broad zone of weak uranium mineralization near the unconformity in one hole and an interesting intercept of significant base-metal mineralization in another hole. Denison plans to follow up on these hits with more drilling at the site later this year. Hatchet Lake is 15 km north of the McClean Lake mill. Denison owns 59% of the project, alongside 41% partner Anthem Resources (TSXV: AYN; US-OTC: VAERF).

Denison plans to head back to Bell Lake mid-year, after several drill holes returned weak uranium mineralization. The company says it is “encouraged by the volume of strong alteration in the sandstone and basement in several of the drill holes at Bell South.” Bell Lake is also in the eastern Athabasca, 37 km northwest of the McClean Lake mill along the Athabasca seasonal road, and Denison owns it outright.

Even while juggling 10 exploration programs Denison found time to acquire International Enexco (TSXV: IEC), in an all-share deal that has been approved by shareholders and should close by the end of June. The deal gives Denison two key assets: a 30% stake in the Mann Lake project and ownership of Bachman Lake, where Enexco’s 20% stake will boost Denison’s ownership to 100%.

Mann Lake is an exploration project in the eastern Athabasca, between the McArthur River mine and the Wheeler River project, and results to date suggest it lives up  to its prime uranium address. An 11,000-metre drill program that kicked off in January has generated such results as 2.31% U3O8 over 5.1 metres and 3.67% U3O8 over 1.2 metres. Mann Lake is a joint venture: Cameco owns 52.5% and operates the project, and Areva Resources Canada holds the other 17.5%.

Bachman Lake is an early stage asset, but Denison says the property has become “one of its highest-priority uranium exploration projects, due to its location in the southeast Athabasca basin and the presence of strong conductors, graphitic basement and sandstone alteration.”

With $28 million in the bank, exploration successes on several fronts, the acquisition of IEC almost complete and its 22.5% stake in the McClean Lake mill set to generate cash flow in the third quarter when ore arrives from Cigar Lake, Denison is in an enviable position amongst its uranium-exploration peers. Sadowski and Healey both noted Denison’s takeover potential.

News of the assay results from Wheeler River added 7¢ to Denison’s share price, lifting it to $1.50. Shares have a 52-week price range of $1.01 to $1.95. There are 485 million shares outstanding.

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Project geologist Yongxing Liu at a core-storage facility at Denison Mines' Wheeler River uranium project in Saskatchewan. Credit: Denison Mines
Project geologist Yongxing Liu at a core-storage facili...

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