TORONTO, Sept. 4, 2018
/CNW/ - Denison Mines Corp. ("Denison" or the "Company") (TSX: DML)
(NYSE American: DNN) is pleased to announce that it has entered
into an agreement with Cameco Corp. ("Cameco") to increase its
ownership in the Wheeler River Uranium Project ("Wheeler River" or
the "Project") through the acquisition of Cameco's minority
interest in the Project (the "Transaction"). View PDF
version.
Pursuant to the terms of the Transaction, and subject to certain
rights of first refusal ("ROFR") in favor of JCU (Canada) Exploration Company Limited ("JCU"),
Denison has agreed to acquire 100% of Cameco's interest (expected
to be approximately 24% by the end of 2018) in the Wheeler River
Joint Venture ("Wheeler River JV"), in exchange for the issuance of
24,615,000 common shares of Denison (the "Consideration Shares") at
a deemed price of $0.65 per share,
for total consideration valued at approximately $16 million (the "Purchase Price"). The
acquisition of Cameco's interest in the Wheeler River JV will
increase Denison's interest in the Project to 90% (or approximately
86.84% if JCU exercises its ROFR).
David Cates, President and CEO of
Denison, commented "We are pleased to have reached an
agreement with Cameco to acquire their remaining minority interest
in Wheeler River. Denison, Cameco and JCU have worked together,
since 2004, to advance Wheeler River to the point of being the
largest undeveloped uranium project in the eastern Athabasca Basin. We believe this
transaction represents a unique opportunity to add to our existing
controlling interest in the Project and offer significant value
accretion to Denison shareholders." Mr. Cates
further added, "We are eager to continue advancing the
Project towards a development decision – with the next step being
the planned completion of a Pre-Feasibility Study before the end of
the third quarter."
Wheeler River is host to the Phoenix and Gryphon uranium deposits, which
are estimated to contain combined Indicated Mineral Resources of
132.1 million pounds U3O8 at an average grade
of 3.3% U3O8, plus combined Inferred Mineral
Resources of 3.0 million pounds U3O8 at an
average grade of 1.7% U3O8. The Project
is situated along the road and power line that runs between
Cameco's McArthur River mine and Key
Lake mill complex in northern Saskatchewan, and is a joint venture between
Denison (63.3%, increasing to approximately 66% by the end of 2018
under a previously announced earn-in agreement), Cameco (26.7%,
decreasing to approximately 24% by the end of 2018), and JCU
(10%).
Restriction on Denison Shares
The Consideration Shares will be subject to a six month escrow
period, during which time Cameco has agreed to not, directly or
indirectly, transfer any Consideration Shares without the prior
written consent of Denison. The transfer of the Consideration
Shares is also restricted for a further six month period, where
Denison retains the right, under certain circumstances, to
designate a purchaser upon notice from Cameco of the intent to
transfer or sell all or a portion of the Consideration
Shares. The issuance of the Consideration Shares is subject to
the receipt of regulatory approvals from the TSX and NYSE American
stock exchanges.
Rights of First Refusal
Under the terms of the Wheeler River JV, JCU's ROFR allows for
JCU to purchase its proportional interest of Cameco's share of the
Wheeler River JV alongside of Denison. Based on Denison's expected
ownership interest of approximately 66%, and JCU's ownership
interest of 10%, JCU would have the right to purchase approximately
13.16% of Cameco's expected 24% interest in the Wheeler River
JV.
The Transaction is not conditional on JCU waiving its
ROFR. Accordingly, should JCU elect to exercise the ROFR, the
Purchase Price to be paid to Cameco by Denison shall be reduced to
approximately $13.9 million and
Denison will own approximately 86.84% (rather than 90%) of the
Wheeler River JV on completion of the Transaction.
Advisors & Counsel
Haywood Securities Inc. is acting as financial adviser to
Denison in connection with the transaction, and Blake, Cassels
& Graydon LLP is acting as legal counsel to Denison.
About Wheeler River
Wheeler River is the largest undeveloped uranium project in
the infrastructure rich eastern portion of the Athabasca Basin region, in northern
Saskatchewan – including combined
Indicated Mineral Resources of 132.1 million pounds
U3O8 at an average grade of 3.3%
U3O8, plus combined Inferred Mineral
Resources of 3.0 million pounds U3O8 at an
average grade of 1.7% U3O8. The project
is host to the high-grade Gryphon and Phoenix uranium deposits (discovered by
Denison in 2014 and 2008, respectively), and is a joint venture
between Denison (63.3% and operator), Cameco (26.7%), and JCU
(10%).
A Pre-Feasibility Study ("PFS") was initiated for the Wheeler
River project in Q3'2016 and is expected to be completed during
Q3'2018. Prior to initiation of the PFS, a Preliminary Economic
Assessment ("PEA") was completed in 2016, which considered the
potential economic merit of co-developing the high-grade Gryphon
and Phoenix deposits as a single
underground mining operation. The PEA returned a base case pre-tax
Internal Rate of Return ("IRR") of 20.4% based on the then current
long term contract price of uranium (US$44.00 per pound U3O8),
and Denison's 60% share of estimated initial capital expenditures
("CAPEX") of CAD$336M (CAD$560M on 100% basis).
The PEA is preliminary in nature and includes inferred
mineral resources that are considered too speculative geologically
to have the economic considerations applied to them to be
categorized as mineral reserves, and there is no certainty that the
preliminary economic assessment will be realized. Mineral resources
are not mineral reserves and do not have demonstrated economic
viability.
In January, 2017, Denison entered into an agreement with its
Wheeler River Joint Venture partners, Cameco and JCU, to fund 75%
of Joint Venture expenses in 2017 and 2018 (ordinarily 60%) in
exchange for an increase in Denison's interest in the project to up
to approximately 66%. Under the terms of the agreement, Cameco will
fund 50% of its ordinary 30% share in 2017 and 2018, and JCU is
expected to continue to fund its 10% interest in the project.
Pursuant to the agreement, as at December
31, 2017, Denison had increased its interest in the Wheeler
River project from 60% to 63.3%.
Further details regarding the Wheeler River project are
provided in the NI 43-101 Technical Report for the Wheeler River
project titled "Technical Report with an Updated Resource Estimate
for the Wheeler River Property, Northern
Saskatchewan, Canada" dated March 15,
2018 with an effective date of March
9, 2018. A copy of this report is available on
Denison's website and under its profile on SEDAR at
www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml. Dale Verran, MSc, P.Geo, Pr.Sci.Nat., Denison's
Vice President, Exploration, who is a Qualified Person in
accordance with the requirements of NI 43-101 has reviewed and
approved the technical information contained in this
release.
About Denison
Denison is a uranium exploration and development company with
interests focused in the Athabasca
Basin region of northern Saskatchewan,
Canada. In addition to its 63.3% owned Wheeler River
project, which ranks as the largest undeveloped high-grade uranium
project in the infrastructure rich eastern portion of the
Athabasca Basin region, Denison's
Athabasca Basin exploration
portfolio consists of numerous projects covering approximately
321,000 hectares. Denison's interests in Athabasca Basin also include a 22.5% ownership
interest in the McClean Lake joint venture ("MLJV"), which includes
several uranium deposits and the McClean Lake uranium mill, which
is currently processing ore from the Cigar Lake mine under a toll
milling agreement, plus a 25.17% interest in the Midwest and
Midwest A deposits, and a 65.45% interest in the J Zone deposit and
Huskie discovery on the Waterbury Lake property. Each of Midwest,
Midwest A, J Zone and Huskie are located within 20 kilometres of
the McClean Lake mill.
Denison is also engaged in mine decommissioning and
environmental services through its Denison Environmental Services
division and is the manager of Uranium Participation Corp., a
publicly traded company which invests in uranium oxide and uranium
hexafluoride.
Cautionary Statement Regarding Forward-Looking Statements
Certain information contained in this press release
constitutes "forward-looking information", within the meaning of
the United States Private Securities Litigation Reform Act of 1995
and similar Canadian legislation concerning the business,
operations and financial performance and condition of Denison.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes", or the negatives and/or variations of
such words and phrases, or state that certain actions, events or
results "may", "could", "would", "might" or "will be taken",
"occur", "be achieved" or "has the potential to". In particular,
this press release contains forward-looking information pertaining
to the following: Denison's percentage interest in its properties
and its plans and agreements with its joint venture partners; the
proposed transaction with Cameco, including its terms, conditions,
and likelihood and anticipated effect of its completion; effect of
completion; the interests of JCU and its rights under the terms of
the Wheeler River JV; estimates of Denison's mineral resources and
the results of its PEA; and plans and objectives with respect to
preparing a PFS to assess on a preliminary basis the potential for
project development. Statements relating to "mineral reserves"
or "mineral resources" are deemed to be forward-looking
information, as they involve the implied assessment, based on
certain estimates and assumptions that the mineral reserves and
mineral resources described can be profitably produced in the
future.
Forward looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or
achievements of Denison to be materially different from those
expressed or implied by forward-looking statements. Denison
believes that the expectations reflected in this forward-looking
information are reasonable but no assurance can be given that these
expectations will prove to be accurate and may differ materially
from those anticipated in this forward looking information. For a
discussion in respect of risks and other factors that could
influence forward-looking events, please refer to the factors
discussed in Denison's Annual Information Form dated March 27, 2018 under the heading "Risk Factors".
These factors are not, and should not be construed as being
exhaustive. Accordingly, readers should not place undue reliance on
forward-looking statements.
The forward-looking information contained in this press
release is expressly qualified by this cautionary statement. Any
forward-looking information and the assumptions made with respect
thereto speaks only as of the date of this press release. Denison
does not undertake any obligation to publicly update or revise any
forward-looking information after the date of this press release to
conform such information to actual results or to changes in
Denison's expectations except as otherwise required by applicable
legislation.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Mineral
Resources: This press release may use the terms
"measured", "indicated" and "inferred" mineral resources.
United States investors are
advised that while such terms are recognized and required by
Canadian regulations, the United States Securities and Exchange
Commission does not recognize them. "Inferred mineral resources"
have a great amount of uncertainty as to their existence, and as to
their economic and legal feasibility. It cannot be assumed that all
or any part of an inferred mineral resource will ever be upgraded
to a higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or other
economic studies. United States investors are cautioned not to
assume that all or any part of measured or indicated mineral
resources will ever be converted into mineral reserves.
United States investors are also
cautioned not to assume that all or any part of an inferred mineral
resource exists, or is economically or legally mineable.
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SOURCE Denison Mines Corp.