Denison Mines Corp. [DML-TSX; DNN-NYSE MKT] is launching a major uranium exploration program on its mineral holdings in the prolific Athabasca Basin of northern Saskatchewan. Their $14.5 million (Denison’s share) budget will be focused on the 60%-owned flagship Wheeler River Project. Cameco holds 30% and JCU Canada 10%. Denison also has a 22.5% interest in the operating McClean Lake uranium mill.
At the Wheeler River property, the Phoenix deposit has indicated resources of 70.2M lbs U3O8 grading 19.1% U3O8, and is the highest grade undeveloped uranium deposit in the world. The Gryphon deposit is hosted in basement rock, approximately 3 km northwest of Phoenix, and hosts inferred resources of 43M lbs U3O8 grading 2.3% U3O8.
In an interview with Resource World, David Cates, President and CEO, discusses the outlook for the uranium sector.
RESOURCE WORLD: Talking to investors and mining executives, I’m getting two kinds of comments: 1) Uranium is asleep and will stay that way for some time, and 2) the price of uranium is just now starting to recover. What is your take on the uranium price scenario?
DAVID CATES: I think this is a real recovery. When we look at global production costs, the best mine in the world is in Kazakhstan. It’s all-in production cost per pound for a breakeven basis is just over US $20 a pound. So that tells me when we were at $18, we couldn’t have justified building the best uranium mine in the world. In this market, that’s break even.
To build it, you have to incent it. You have to be at a 20% IRR. We need a price that’s much higher for the best mine in the world to start and we need many mines. Some are being depleted and we need new mines to come on. $18 is not sustainable so I think it’s a real turnaround in the commodity.
RW: Your Wheeler IRR of 20.4% is based on uranium price of US $44 per pound. Does this mean that you will need to wait until uranium reaches that price before you start mining?
For the rest of this interview, click here: http://resourceworld.com/index.php/interview-david-cates-president-ceo-denison-mines/