Denison builds up Wheeler River’s potential as Gryphon expands

VANCOUVER — Ongoing exploration success by Denison Mines (TSX: DML; NYSE-MKT: DNN) at its 60%-owned Wheeler River asset along the eastern edge of Saskatchewan’s Athabasca basin is hinting at good near-term development potential. In June the company  boosted indicated uranium resources at its Phoenix zone by 34%, while the latest drilling at its Gryphon discovery continues to show promise.

Wheeler River hosts conventional unconformity-type uranium mineralization where undeformed, late Paleoproterozoic to Mesoproterozoic sandstones, conglomerates, and mudstones of the Athabasca Group unconformably overlie early Paleoproterozoic and Archean crystalline basement rocks. Mineralization at Gryphon is hosted in basement gneiss, ranging from 100 to 250 metres below the sub-Athabasca unconformity.

Phoenix hosts 166,400 tonnes grading 19.13% uranium oxide (U3O8), which translates to 70.2 million contained lb. U3O8.

Meanwhile, Denison drilled nearly 15,000 metres at Gryphon this year over 20 holes to establish a second high-grade deposit 3 km northeast of Phoenix. Most of the drilling consisted of 50-metre stepouts along strike and downdip of the discovery.

Denison has released the last assays from its mid-year program at Gryhpon, with the zone measuring 350 metres long (along the plunge) by 60 metres wide (across the plunge) and holding multiple stacked lenses, with variable thicknesses that plunge northeast and remain open laterally in both directions. Mineralization is hosted in basement gneiss at depths from 100 to 250 metres below the unconformity.

Highlights from the company’s latest results at Gryphon include hole 573D1, which cut 15.8% U3O8 over 2.3 metres from 767 metres downhole; and hole 574, which hit 7% U3O8  over 2 metres from 665 metres deep, followed by 9.8% U3O8 over 2.5 metres.

President and CEO Ronald Hochstein said in the release that Denison’s mid-year program at Gryphon was “encouraging,” and noted the company established a geological model at the discovery in a short time.

Denison says the mineralization dips moderately southeast, with a projected 75% true thickness of the intersection lengths.

In August Denison closed a $15-million flow-through offering wherein it issued 9.4 million shares for $1.62 per share. Hochstein said the proceeds would fully fund next year’s exploration program at Gryphon, as well as testing other targets in the company’s portfolio.

BMO Capital Markets analyst Edward Sterck — who has a “market perform” rating on Denison, along with $1.50-per-share price target — commended the company’s exploration methodology in June after the Phoenix resource update, but wrote that “the current resource lacks critical mass at the uranium spot price.”

BMO Research says Denison will need to delineate in excess of 40 million lb. U3O8 at Gryphon to create a “combined resource that could be sufficiently large to support development, with a shaft sunk midway between the deposits — though this [scenario] would still require higher-than-current uranium prices.”

Denison shares have traded within a 52-week window of $1.01 to $1.95, and closed at $1.31 at press time.

The company has 496 million shares outstanding for a $649-million market capitalization.