McClean Lake uranium mine headed for 2025 restart

Denison Mines (TSX: DML; NYSE: DNN) and joint venture partner Orano Canada said on Wednesday they will restart the McClean Lake mine, located in the uranium-rich Athabasca Basin in northern Saskatchewan, amid improving project and commodity economics.

Operations at McClean Lake, owned by the namesake JV (MLJV) in which Orano is the operator and has a 77.5% stake, were suspended in 2008 in response to weak uranium prices.

The partners continued to explore the licence and invested in a proprietary mining method named SABRE, which is designed to selectively extract high-grade uranium ores from surface.

Mining is planned to restart at the McClean North deposit in 2025, with a target of about 800,000 lb. of uranium that year, the partners said. Activities this year are focused on readying the site and equipment for continuous commercial operations, they noted. 

“The successful mining test of the SABRE method in 2021 provided the MLJV with important information about the productivity and cost of the operation,” Denison’s president and CEO David Cates said. “This information suggests an incentive price meaningfully lower than current uranium prices, which has provided the JV with a strong basis to make a restart decision for mining.”

The restart news comes as uranium prices have recently hit their highest in more than 16 years, after the world’s largest miner of the nuclear fuel, Kazakhstan’s Kazatomprom (LSE: KAP), highlighted production risks. The commodity’s bonanza is likely to continue prompting the restart of mothballed capacity. Denison has also experienced a productive period in Saskatchewan in recent months, with results in November from its Wheeler River in-situ recovery project demonstrating commercial viability, and its inking of an option deal last week for Grounded Lithium‘s (TSXV: GRD; US-OTC: GRDAF) Kindersley project further south.    

BMO Capital Markets uranium analyst Alexander Pearce said in a note on Wednesday the decision to restart McClean Lake is positive for Denison because it could help with modest near-term cash flow as it develops Wheeler River. 

MLJV will also install eight pilot holes for the first mining cavities planned for excavation.

The companies noted they have identified the availability of around 3 million lb. of yellow cake for potential additional production from a combination of the McClean North and Caribou deposits during the 2026-2030 period.

Orano Canada’s president and chief executive, Jim Corman, said the JV’s current ability to capitalize on the strengthening uranium and nuclear markets is the result of a long-term investment in research and development to secure continued activities at McClean Lake.

The property, about 750 km north of Saskatoon, consists of four mineral leases covering an area of 11.5 sq. km and 13 mineral claims over an area of 31.1 sq. km.

Denison shares were up 2.4% $2.70 apiece on Wednesday morning in Toronto, valuing the company at $2.4 billion. Its shares traded in a 52-week range of $1.28 and $2.85.