Saskatchewan juniors jostle to advance Canada’s next new uranium mine

With uranium prices continuing their slow climb over the last four years while the geopolitical situation highlights the need for secure energy supplies, all eyes are on Canada’s next big uranium projects.

Three top contenders are currently developing promising projects in the prolific Athabasca Basin of northern Saskatchewan. 

Denison Mines: Saskatchewan’s first ISR mine?

On the southeastern edge of the basin, Denison Mines (TSX: DML; NYSE-MKT: DNN) is advancing its Wheeler River project, what the company calls the “largest undeveloped uranium project in the eastern portion of the Athabasca Basin region.”

Located about 35 km northeast of the Key Lake mill and 35 km southwest of the McArthur River mine, the project is a joint venture between Denison and JCU (Canada) Exploration in a 90-10 split. Denison acquired 50% of JCU in 2021, giving it 95% of Wheeler River.  

The project comprises the high-grade Phoenix and Gryphon deposits. Phoenix has probable reserves of 59.7 million lb. U₃O₈ in 141,000 tonnes grading 19.1% U₃O₈; Gryphon contains 49.7 million lb. U₃O₈ in 1.2 million tonnes at 1.8% U₃O₈), according to a 2018 prefeasibility study.

The study estimates the combined deposits could produce 109.4 million lb. U₃O₈ over a 14-year mine life, generating a pre-tax net present value of $1.3 billion at an 8% discount rate. The internal rate of return is pegged at 38.7%, and initial capital costs are expected to come to $322.5 million.

Overall, the project’s features rank it in the “top three largest undeveloped uranium projects in Canada,” Canaccord Genuity analyst Katie Lachapelle said in an email to The Northern Miner.

The Toronto-headquartered company plans to develop Phoenix and Gryphon as in-situ recovery (ISR) and underground operations, respectively.

Its Phoenix ISR field tests – among the first conducted in the basin — returned positive results on Oct. 17, which the company described as “history in the making.”

Following the leaching phase, the company plans a second neutralization phase before the end of the year. A third phase of testing focused on managing the recovered solution is expected next spring.

The results should also help ease concerns over Denison’s decision to pursue ISR mining at Phoenix and inform the feasibility study, expected to be finished in 2023, said Lachapelle.

“We believe this is [also] a positive de-risking event from a regulatory standpoint, as Denison advances project permitting and looks to submit its final environmental impact statement in the coming months,” she said.

Denison aims to begin construction of Phoenix in 2023 and production in 2024. Construction of Gryphon could start in 2026, although Denison noted that project timelines were affected by Covid-19-related suspensions at Wheeler River in 2020 and the dates “should not be relied upon.”

Canaccord assumes first production at Phoenix in 2027.

Denison’s shares were trading at $1.66 at press time. Its equity has traded in a 52-week window of $1.18 and $2.64. It has a market cap of $1.3 billion.

‘World-class project’ from NexGen

On the southwestern edge of the basin is NexGen Energy (TSX: NXE; NYSE: NXE)’s Rook 1 project, which hosts the high-grade Arrow deposit.

Rook 1 is more advanced than Wheeler River, with the company having completed a feasibility study for the underground project in 2021.

Mineralization at Arrow occurs in five shear zones along 980 metres of strike. The zones are up to 315 metres wide with mineralization starting at 100 metres depth and extending down to 980 metres. Each shear is between 2 and 60 metres wide. Arrow remains open in most directions and at depth.

David Talbot, an analyst with Red Cloud Securities in Toronto said he believes Rook 1 is “probably the world’s best uranium asset” due mainly to the local geology.

“The Rook 1 project is big [and] it’s in the right jurisdiction. It’s relatively shallow and it’s not hosted in sandstone,” he said, referring to the basement rock of Arrow that isn’t as permeable or prone to fracturing compared to the sandstone that hosts the McArthur River and Cigar Lake mines’ deposits.

“If you don’t have good, quality rock, you’re not able to mine it without some help. Those other operations… they essentially hold the deposits together by freezing them, which is incredibly costly and it takes a lot more time and effort,” Talbot said.

Probable mineral reserves, divided into two main structures of A2 and A3, come to a total of 4.5 million tonnes grading 2.37% U₃O₈, for 239.6 million lb. of contained U₃O₈.

The feasibility study put Rook’s measured and indicated resources at 3.7 million tonnes grading 3.1% U₃O₈ for 256.7 million lb. contained uranium oxide, for a 10.7-year mine life.

The project would produce 29 million lb. of U₃O₈ annually for the first five years.

The capex is estimated at $1.3 billion, with NexGen aiming to start early works in the first half of 2023.

Operating costs are estimated at US$5.69 per lb., what NexGen calls “among the lowest in the industry.”

The miner has also made significant progress in its permitting, with the Canadian Nuclear Safety Commission (CNSC) accepting NexGen’s draft environmental impact statement in July, starting a 90-day period of federal and public review of the document.  

In addition, it has signed IBAs with the Buffalo River, Birch Narrows and Clearwater River Dene Nations. Negotiations on an IBA with the Métis Nation-Saskatchewan are ongoing.

The company aims to complete its front end engineering design, detailed engineering, and final licensing by the third quarter of 2023.

“I think getting the permits about this time next year is the true key, that’s what everyone is waiting for,” Talbot said. “That’s the one decision that will have this project move forwards because at that point you can finance it. I don’t expect them to have much difficulty getting this project built.”

If the permits are secured by late 2023, construction could take about two years and production could “realistically” start in 2027-2028, Talbot said, adding that the company could be an attractive takeover target.

“That will coincide nicely with a widening uranium supply gap in the market,” he said. “For a company making uranium for under $10 per pound I think that’s a pretty good margin. Hence the ability to pay off the debt, hence the attractiveness for someone to come in and purchase the project because it’s definitely world class.”

At press time, NexGen shares were trading at $5.44 in a 52-week window of $4.43 and $8.30. It has a market cap of $2.6 billion.

Fission ‘next hotspot for high-grade production’

Located just 3 km away from Rook 1, Fission Uranium (TSX: FCU; US-OTC: FCUUF)’s Patterson Lake South (PLS) project is coming into sharper focus, 10 years after Fission discovered the Triple R deposit.

Sitting on the southwest rim of the basin and 160 north km of La Loche, Sask., the British Columbia-based miner touts Triple R as the region’s largest high-grade uranium deposit at shallow depth. About half of the resource lies under Patterson Lake.  

The year could prove to be eventful for the project, with a feasibility study expected in the fourth quarter. In September, the company announced a 21.3% increase in indicated resources of 472,000 tonnes.

The Triple R deposit comprises five mineralized zones ranging from 60 to 100 metres wide over a strike length of 3.2 km. The shallow deposit starts at about 50 metres below surface and extends down to 300 metres and remains open in most directions.

Mineral reserves total 2.3 million tonnes grading 1.61% U₃O₈, containing 81.4 million lb. U₃O₈.

Fission also aims to increase the project’s mine life from 7.3 years in the PLS prefeasibility study in 2019 to potentially 10 years in its upcoming feasibility study. The study will be based on the new resource, which incorporates results from 175 holes drilled over the last three years.

That study pegs pre-production capital costs at $1.1 billion and sustaining capital costs (including reclamation) at $282 million, over the mine’s life. Operating costs are estimated at US$7.18 per lb, with annual production forecast at 11.3 million lb. U₃O₈.

The company estimates a three-year construction period for PLS, starting around 2026, with production beginning in 2029 — assuming permitting goes smoothly.

Canaccord models first production at PLS in 2030.

“The project could be delayed by receipt of permits and financing, given its significant upfront capital cost,” she said.

For its environmental assessment process, which it started in 2021 Fission has thus far completed the voluntary agreement and terms of reference approval of its Environmental Assessment with Saskatchewan’s Ministry of Environment.

In a research note this summer, Canaccord pointed out that the remote location of PLS and its proximity to several Indigenous communities will make permitting “one of the largest outstanding risks” facing the project.

However, Fission stated in a corporate update in October that it has signed engagement, capacity and funding agreements with the local Clearwater River Dene Nation, Buffalo River Dene Nation and the Athabasca Nations & Communities of the Nuhenéné. Those agreements would precede impact benefit agreements (IBA) further down the road.

Outstanding permitting processes, such as the public and provincial reviews of the environmental impact statement and assessment, as well as the CNSC licence are anticipated to be complete by 2028.

Despite those permitting hurdles, Lachapelle said she believes PLS will become one of the next big uranium producers in Canada “in time.”

“Triple R is [in] an area which we believe is poised to be the next hotspot for high-grade uranium production with recent discoveries totalling [more than] 400 million lb. of U₃O₈,” she said.

At press time in Toronto, Fission shares were trading at 67¢, in a 52-week window of 56¢ and $1.19. It has a market cap of $456 million.