Denison Reports Significant Increase in Economic Results for Wheeler River

Press Release

TORONTO, June 26, 2023 – Denison Mines Corp. (“Denison” or the “Company”) (TSX: DML) (NYSE American: DNN) is pleased to report the results of (i) the Feasibility Study (“Phoenix FS”) completed for In-Situ Recovery (“ISR”) mining of the high-grade Phoenix uranium deposit (“Phoenix”) and (ii) a cost update (“Gryphon Update”) to the 2018 Pre-Feasibility Study (“2018 PFS”) for conventional underground mining of the basement-hosted Gryphon uranium deposit (“Gryphon”). With the successful completion of the Phoenix FS, Denison has advanced the planned Phoenix ISR project through the technical de-risking process and has already commenced the first phases of project execution. View PDF version

Phoenix and Gryphon are part of the Wheeler River Uranium Project (“Wheeler River” or the “Project”), which is the largest undeveloped uranium mining project in the infrastructure-rich eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada. Denison has an effective 95% ownership interest in Wheeler River and is the project operator.

David Cates, Denison’s President & CEO commented, “The Phoenix FS and Gryphon Update confirm the robust economics of the two projects situated within the Company’s flagship Wheeler River property, producing base-case after-tax net present values of $1.6 billion and $0.9 billion, respectively.

After 4.5 years of rigorous technical de-risking and independent third-party validation, Phoenix has cemented its position as one of the lowest-cost uranium development projects in the world. Notably, despite the considerable capital cost pressures experienced by the global mining industry over the last two years, the economics of a Phoenix ISR mining operation remain exceptionally robust – producing an improvement in projections of NPV and IRR, when compared to the 2018 PFS, as a result of favourable design changes and optimizations. While most contemporary uranium development projects have not yet been tested against current cost inflation, the results of the Phoenix FS and Gryphon Update demonstrate that Denison continues to be uniquely positioned to become a meaningful uranium producer with multiple low-cost development assets.

With the highly positive results of the Phoenix FS, our team has already shifted focus to advancing front-end engineering and design efforts, with a target of transitioning into detailed design before the end of the year.”

This press release constitutes a “designated news release” for the purposes of the Company’s prospectus supplement dated September 28, 2021 to its short form base shelf prospectus dated September 16, 2021.

• Base case pre-tax Net Present Value (“NPV”) (8%) of $2.34 billion (100% ownership-basis) is a 150% increase in the base-case pre-tax NPV_8% for Phoenix from the 2018 PFS.
• Very robust base-case pre-tax Internal Rate of Return (“IRR”) of 105.9%.
• Base-case after-tax NPV_8% of $1.56 billion (100% basis) and IRR of 90.0% – with Denison’s effective 95% interest in the project equating to a base-case after-tax NPV_8% of $1.48 billion.
• Base-case pre-tax and after-tax payback period of 10 months – equating to a reduction of 11 months for the pre-tax payback period from the 2018 PFS.
• Production profile has been optimized, based on ISR mine planning efforts evaluating production potential for individual well patterns – resulting in an increase to the planned rate of production by approximately 43% during the first five years of operations.
• Estimated pre-production capital costs of under $420 million (100% basis), yielding an impressive after-tax NPV to initial capital cost ratio in excess of 3.7 to 1.
• Robust economics easily absorb cost-inflation and design changes impacting both operating and capital costs, confirming Phoenix’s position with estimated cash operating and all-in costs expected to be amongst the lowest-cost uranium mines in the world.
• Phoenix FS plans are aligned and costed to meet or exceed environmental criteria expected to be required by the ongoing regulatory approval process.
• Updated mineral resource estimate, reflecting results of 70 drill holes completed in support of ISR de-risking and resource delineation activities, has upgraded 30.9 million pounds U₃O₈ into Measured mineral resources, and increased the average grade of the Zone A high-grade domain, which is now estimated to contain 56.3 million pounds U₃O₈ in Measured and Indicated mineral resources at an average grade of 46.0% U₃O₈.
• Upgraded 3.4 million pounds U₃O₈ into Proven mineral reserves, representing the equivalent of 85% of production planned during the first calendar year of operations.

• The Phoenix FS reflects independent third-party validation of the selection of the ISR mining method for Phoenix, and builds on the findings from a comprehensive and rigorous multi-year technical de-risking process highlighted by the highly successful completion of the leaching and neutralization phases of the Phoenix Feasibility Field Test (“FFT”) in late 2022.
• Through the technical de-risking process, Denison has acquired extensive deposit-specific data and developed a robust ISR mine planning model that involved evaluation of the production potential for individual well patterns.
• With technical de-risking of the project substantially complete, front-end engineering design (“FEED”) efforts to support the advancement of the planned Phoenix operation are already significantly progressed and the Company is on track to transition into detailed design efforts, consistent with the Company’s Outlook for 2023, before the end of the year.

• Scope of Gryphon Update was targeted at the review and update of capital and operating costs – mining and processing plans remaining largely unchanged from the 2018 PFS aside from minor scheduling and construction sequencing optimizations.
• Base case pre-tax NPV (8%) of $1.43 billion (100% basis) is a 148% increase in the base-case pre-tax NPV_8% for Gryphon from the 2018 PFS.
• Strong base-case pre-tax IRR of 41.4%.
• Base-case after-tax NPV_8% of $864.2 million (100% basis) and IRR of 37.6% – with Denison’s effective 95% interest in the project equating to a base-case after-tax NPV_8% of $821.0 million.
• Base-case pre-tax payback period of 20 months, and base-case after-tax payback period of 22 months – equating to a reduction of 17 months for the pre-tax payback period from the 2018 PFS.
• Project remains to be positioned amongst the lowest-cost uranium mines in the world and provides Denison with an additional source of low-cost potential production to deploy significant free cash flows expected from Phoenix.

The results of the Phoenix FS and Gryphon Update have been reviewed and approved by the Technical Committee of Denison’s Board of Directors.

All amounts are in Canadian dollars unless indicated otherwise.

The Phoenix FS was completed by Wood Canada Limited (“Wood”), WSP USA Environment and Infrastructure Inc. (“WSP”), SRK Consulting (Canada) Inc. (“SRK”), and Newmans Geotechnique Inc. (“Newmans”). The study confirms robust economics and the technical viability of an ISR uranium mining operation with low initial capital costs and a high rate of return.

The Phoenix FS reflects several design changes and the results of a rigorous technical de-risking program completed by Denison over the last 4.5 years following the publication of the 2018 PFS, which was highlighted by the then-novel selection of the ISR mining method for Phoenix.

With the benefit of extensive metallurgical and field testing of all key elements of the proposed ISR mining operation, and current cost estimates reflecting recent inflationary pressures, the Phoenix FS is expected to provide Denison with an excellent basis to advance engineering designs in support of a future final investment decision (“FID”).

Read More:

IBF4