EX-99.2 3 technicalreport-wheelerri.htm TECHNICAL REPORT WITH AN UPDATED MINERAL RESOURCE ESTIMATE FOR THE WHEELER RIVER PROPERTY, DATED MARCH 15, 2018 Blueprint

 
 
 
Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada
 
 
 
Report Prepared for
Denison Mines Corp.
 
 
 
 
Effective date:                                            March 9, 2018
Signature date:                                            March 15, 2018
 
 
 
Report Prepared by
 

 
 
Main Authors
 
 
Ken Reipas, P.Eng
Associate Consultant (Mining), SRK Consulting
Mark Mathisen, C.P.G.
Principal Geologist, RPA
 
 
 
 
 
Qualified Persons
 
 
Ken Reipas, P.Eng, SRK Consulting
 
Mark Mathisen, C.P.G., RPA
 
William E. Roscoe, Ph.D, P.Eng, RPA
Michael Royle, P.Geo, SRK Consulting
 
Bruce Murphy, P.Eng, SRK Consulting
 
Greg Newman, P.Eng, Newmans Geotechnique Inc.
 
Mark Liskowich, P.Geo, SRK Consulting
 
Tom Sharp, P.Eng, SRK Consulting
 
Kelly Sexsmith, P.Geo, SRK Consulting
 
Chuck Edwards, P.Eng, SRC
 
 
 
 
 
 
www.denisonmines.com
 
 
 
Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property, Northern Saskatchewan, Canada
 
 
Denison Mines Corp.
230-22nd Street East, Suite 200
Saskatoon, Saskatchewan, Canada
S7K 0E9
Website: www.denisonmines.com
Tel: +1 306 652 8200
Fax: +1 306 652 8202
 
SRK Consulting (Canada) Inc.
151 Yonge St., Suite 1300
Toronto, Ontario, Canada
M5C 2W7
E-mail: toronto@srk.com
Website: www.srk.com
Tel: +1 416 601 1445
Fax: +1 416 601 9046
Roscoe Postle Associates Inc.
55 University Avenue, Suite 501
Toronto, Ontario, Canada
M5J 2H7
Email: Deborah.McCombe@rpacan.com
Website: www.rpacan.com
Tel: +1 416 947 0907
Fax: +1 416 947 0395
 
 
 
               Effective Date:             March 9, 2018
               Signature Date:             March 15, 2018
 

 
 
 
Main Authors:
Ken Reipas, P.Eng
Associate Consultant (Mining), SRK Consulting
Mark Mathisen, C.P.G.
Principal Geologist, RPA
 
 
 
 
 
 
 
 
 
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
 
www.denisonmines.com
 
IMPORTANT NOTICE
 
THIS IMPORTANT NOTICE APPLIES TO EACH SECTION/SUBSECTION PREPARED BY SRK CONSULTING:
 
This report was prepared as a National Instrument 43-101 Standards of Disclosure for Mineral Projects Technical Report for Denison Mines Corp. (Denison) by SRK Consulting (Canada) Inc. (SRK). The quality of information, conclusions, and estimates contained herein are consistent with the quality of effort involved in SRK’s services. The information, conclusions, and estimates contained herein are based on: i) information available at the time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and qualifications set forth in this report. This report is intended for use by Denison subject to the terms and conditions of its contract with SRK and relevant securities legislation. The contract permits Denison to file this report as a Technical Report with Canadian securities regulatory authorities pursuant to National Instrument 43-101. Except for the purposes legislated under provincial securities law, any other uses of this report by any third party is at that party’s sole risk. The responsibility for this disclosure remains with Denison. The user of this document should ensure that this is the most recent Technical Report for the property as it is not valid if a new Technical Report has been issued.
 
© 2018 SRK Consulting (Canada) Inc.
 
This document, as a collective work of content and the coordination, arrangement and any enhancement of said content, is protected by copyright vested in SRK Consulting (Canada) Inc. (SRK).
 
Outside the purposes legislated under provincial securities laws and stipulated in SRK’s client contract, this document shall not be reproduced in full or in any edited, abridged or otherwise amended form unless expressly agreed in writing by SRK.
 
 
 
 
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
 
www.denisonmines.com
 
 
Table of Contents
 
Table of Contents
 
i
List of Tables
 
 
viii
List of Figures
 
 
x
1
 
 
Summary
1
 
1.1
 
Executive Summary
1
 
1.2
 
Technical Summary
2
 
 
1.2.1
Property Description, Location and Access
2
 
 
1.2.2
Land Tenure
2
 
 
1.2.3
History
3
 
 
1.2.4
Geology and Mineralization
3
 
 
1.2.5
Mineral Resources
5
 
 
1.2.6
Mineral Resources within PEA Design Plan
6
 
 
1.2.7
Hydrogeology and Mine Geotechnical
7
 
 
1.2.8
Mining
8
 
 
1.2.9
Mineral Processing
12
 
 
1.2.10
Surface Infrastructure
14
 
 
1.2.11
Environmental and Permitting
14
 
 
1.2.12
Capital and Operating Costs
15
 
 
1.2.13
Indicative Economic Results
15
 
 
1.2.14
Risks and Opportunities
17
 
 
1.2.15
Conclusions and Recommendations
17
2
2.1
 
Introduction
19
 
2.2
 
Basis of Technical Report
20
 
2.3
 
Qualified Persons
22
 
2.4
 
Qualifications of SRK and RPA
22
 
2.5
 
Site Visit
23
 
 
 
Declaration
23
3
 
 
Reliance on Other Experts
24
 
3.1
 
SRK
24
 
3.2
 
RPA
24
4
 
 
Property Description and Location
25
 
4.1
 
Property Location
25
 
4.2
 
Land Tenure
25
 
4.3
 
Mineral Rights
26
 
4.4
 
Royalties and other Encumbrances
26
 
4.5
 
Permitting
26
5
 
 
Accessibility, Climate, Local Resources, Infrastructure, and Physiography
29
 
5.1
 
Accessibility
29
 
5.2
 
Climate
29
 
5.3
 
Local Resources and Infrastructure
29
 
5.4
 
Physiography
30
6
 
 
History
31
 
6.1
 
Prior Ownership
31
 
6.2
 
Exploration and Development History
31
 
6.3
 
Previous Mineral Resource Estimates
34
 
6.4
 
Past Production
35
7
 
 
Geological Setting and Mineralization
36
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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7.1
 
Regional Geology
36
 
 
7.1.1
General
36
 
 
7.1.2
The Metamorphosed Basement
36
 
 
7.1.3
The Athabasca Group
37
 
7.2
 
Quaternary Deposits
40
 
7.3
 
Local and Property Geology
40
 
 
7.3.1
General
40
 
 
7.3.2
Quaternary Deposits
40
 
 
7.3.3
Athabasca Group
40
 
 
7.3.4
Basement Geology
43
 
 
7.3.5
Phoenix Deposit
45
 
 
7.3.6
Gryphon Deposit
45
 
7.4
 
Alteration
49
 
 
7.4.1
Phoenix Deposit
49
 
 
7.4.2
Gryphon Deposit
49
 
7.5
 
Structural Geology
50
 
 
7.5.1
Phoenix Deposit
51
 
 
7.5.2
Gryphon Deposit
51
 
7.6
 
Mineralization
54
 
 
7.6.1
Phoenix Deposit
54
 
 
7.6.2
Gryphon Deposit
54
8
 
 
Deposit Types
56
9
 
 
Exploration
60
 
9.1
 
Ground Geophysical Surveys
60
 
 
9.1.1
2009 Induced Polarization Survey
60
 
 
9.1.2
2010 Transient Electromagnetic (TEM) Survey
60
 
 
9.1.3
2011-2012 Induced Polarization Survey
60
 
 
9.1.4
2013 Induced Polarization Survey
60
 
 
9.1.5
2014 Induced Polarization, Gravity and SWML EM Surveys
60
 
 
9.1.6
2015 Induced Polarization Survey
61
 
 
9.1.7
2016 Induced Polarization, Gravity and Borehole Surveys
61
 
 
9.1.8
2017 Borehole Surveys
61
 
9.2
 
Airborne Surveys
61
 
 
9.2.1
2013 VTEM Survey
61
10
 
 
Drilling
62
 
10.1
 
Phoenix Deposit Exploration Drilling
63
 
10.2
 
Gryphon Deposit Exploration Drilling
67
 
10.3
 
Drill Hole Surveying
71
 
10.4
 
Radiometric Logging of Drill Holes
71
 
 
10.4.1
Radiometric Probing
71
 
10.5
 
Sampling Method and Approach
73
 
 
10.5.1
Drill Core Handling and Logging Procedures
73
 
 
10.5.2
Drill Core Sampling
74
 
10.6
 
Core Recovery and Use of Probe Data
75
11
 
 
Sample Preparation, Analyses, and Security
76
 
11.1
 
Geochemical Sample Preparation Procedures
76
 
 
11.1.1
Sample Receiving
76
 
 
11.1.2
Sample Sorting
76
 
 
11.1.3
Sample Preparation
77
 
11.2
 
Analytical Methods
77
 
 
11.2.1
Method: ICP1
77
 
 
11.2.2
Method: ICPMSI
78
 
 
11.2.3
Method: U3O8 wt% Assay
78
 
 
11.2.4
Method: U3O8 wt% Assay
79
 
 
11.2.5
Drill Core Bulk Density Analysis
79
 
 
11.2.6
Reflectance Clay Analyses
79
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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11.3
 
Quality Assurance and Quality Control
80
 
 
11.3.1
Sample Standards, Blanks and Field Duplicates
80
 
 
11.3.2
SRC Internal QA/QC Program
85
 
 
11.3.3
External Laboratory Check Analysis
87
 
 
11.3.4
Security and Confidentiality
87
12
 
 
Data Verification
89
 
12.1
 
Site Visit and Core Review
89
 
12.2
 
Database Validation
89
 
12.3
 
Independent Verification of Assay Table
90
 
12.4
 
Disequilibrium
90
13
 
 
Mineral Processing and Metallurgical Testing
98
 
13.1
 
Phoenix Deposit Metallurgical Testing
98
 
 
13.1.1
Sample Preparation
98
 
 
13.1.2
Leaching Tests
100
 
 
13.1.3
Settling Tests
100
 
 
13.1.4
Solvent Extraction Tests
100
 
 
13.1.5
Yellowcake Precipitation and U3O8 Production
101
 
 
13.1.6
Phoenix Deposit Process Design Criteria
101
 
13.2
 
Gryphon Deposit Metallurgical Testing
102
 
 
13.2.1
Sample Preparation
102
 
 
13.2.2
Leaching Tests
103
 
 
13.2.3
Settling Tests
104
 
 
13.2.4
Solvent Extraction Tests
105
 
 
13.2.5
Yellowcake Precipitation and U3O8 Production
105
 
 
13.2.6
Gryphon Deposit Process Design Criteria
106
14
 
 
Mineral Resource Estimates
107
 
14.1
 
Drill Hole Database
108
 
14.2
 
Geologic Interpretation and 3D Solids
112
 
 
14.2.1
Phoenix Deposit
112
 
 
14.2.2
Gryphon Deposit
118
 
14.3
 
Bulk Density
122
 
 
14.3.1
Phoenix Deposit
122
 
 
14.3.2
Gryphon Deposit
124
 
14.4
 
Statistics
125
 
 
14.4.1
Treatment of High Grade Values
125
 
 
14.4.2
Composites
129
 
14.5
 
Variography – Continuity Analysis
133
 
 
14.5.1
Phoenix Deposit
133
 
 
14.5.2
Gryphon Deposit
133
 
14.6
 
Interpolation Parameters
134
 
 
14.6.1
Phoenix Deposit
134
 
 
14.6.2
Gryphon Deposit
136
 
14.7
 
Block Model Validation
142
 
 
14.7.1
Volume Comparison
143
 
 
14.7.2
Visual Comparison
143
 
 
14.7.3
Statistical Comparison
143
 
 
14.7.4
Check by Different Estimation Methods
146
 
14.8
 
Cut-Off Grade
147
 
 
14.8.1
Phoenix Deposit
147
 
 
14.8.2
Gryphon Deposit
148
 
14.9
 
Classification
149
 
 
14.9.1
Phoenix Deposit
149
 
 
14.9.2
Gryphon Deposit
152
 
14.10
 
Mineral Resource Estimate
153
15
 
 
Mineral Reserve Estimates
155
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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16
 
 
Mining Methods
156
 
16.1
 
Hydrogeology
156
 
 
16.1.1
Regional Operating Mine Experience
156
 
 
16.1.2
Work Completed to Date and Findings
156
 
 
16.1.3
Groundwater Management
157
 
16.2
 
Mine Geotechnical
158
 
 
16.2.1
Geotechnical Context
158
 
 
16.2.2
Data Availability
159
 
 
16.2.3
Large and Small Scale Structure
160
 
 
16.2.4
Rock Geotechnical
162
 
 
16.2.5
Preliminary Geotechnical Domains
163
 
 
16.2.6
Excavation Design
166
 
 
16.2.7
Ground Support
167
 
16.3
 
Mineral Resources within PEA Design Plan
169
 
 
16.3.1
Phoenix Deposit
169
 
 
16.3.2
Gryphon Deposit
172
 
 
16.3.3
Wheeler River Project Potential Mill Feed
174
 
16.4
 
Mining Context
175
 
 
16.4.1
Phoenix
175
 
 
16.4.2
Gryphon
175
 
16.5
 
Mining Methods
176
 
 
16.5.1
Introduction
176
 
 
16.5.2
Phoenix – Jet Bore System
176
 
 
16.5.3
Gryphon – Longhole Stoping
180
 
 
16.5.4
Other Mining Methods Considered
183
 
16.6
 
Underground 3D Mine Model
185
 
 
16.6.1
Mine Access Methods
185
 
 
16.6.2
Phoenix Mine Model
188
 
 
16.6.3
Gryphon Mine Model
190
 
 
16.6.4
Development Requirements
192
 
 
16.6.5
Underground Equipment Requirements
193
 
 
16.6.6
Waste Rock Broken and Backfill Requirements
193
 
 
16.6.7
Other Mine Infrastructure Options Considered
194
 
16.7
 
Development and Production Schedule
196
 
 
16.7.1
Estimated Production Rates
196
 
 
16.7.2
Development and Production Schedule
197
 
16.8
 
Underground Mine Infrastructure and Services
200
 
 
16.8.1
Definition Drilling
200
 
 
16.8.2
Mined Mineralization and Waste Rock Handling
200
 
 
16.8.3
Freeze Wall Infrastructure
201
 
 
16.8.4
Mine Ventilation
201
 
 
16.8.5
Underground Mine Dewatering
202
 
 
16.8.6
Underground Power Distribution
203
 
 
16.8.7
Underground Maintenance Shops
203
 
 
16.8.8
Emergency Escapeway
203
 
 
16.8.9
Refuge Stations
204
17
 
 
Recovery Methods
205
 
17.1
 
Wheeler River Site Processing
205
 
 
17.1.1
Gryphon Deposit Mineralization Handling at Wheeler River
205
 
 
17.1.2
Phoenix Deposit Processing at Wheeler River
206
 
 
17.1.3
Underground Slurry Handling
207
 
 
17.1.4
Surface Slurry Handling
207
 
17.2
 
Transportation
207
 
17.3
 
JEB Mill
208
 
 
17.3.1
JEB Mill Process Description
208
 
 
17.3.2
JEB Mill History
209
 
17.4
 
McClean Lake Co-milling
211
 
 
17.4.1
Mill Feed Rates
211
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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17.4.2
Mill Operating Scenario for Wheeler River Feeds
214
 
17.5
 
Gryphon Deposit Milling
214
 
 
17.5.1
Gryphon Deposit Equipment Design Details
215
 
 
17.5.2
Gryphon Deposit Production Constraints
215
 
17.6
 
Phoenix Deposit Milling
216
 
 
17.6.1
Phoenix Deposit Equipment Design Details
216
 
 
17.6.2
Phoenix Deposit Production Constraints
216
18
 
 
Surface Infrastructure
218
 
18.1
 
Access Road and Site Preparation
218
 
18.2
 
Project Site Layout
218
 
18.3
 
Phoenix Site Layout
219
 
18.4
 
Freeze Plant
221
 
18.5
 
Slurry Load Out Building
221
 
18.6
 
Gryphon Site Layout
221
 
18.7
 
Infrastructure at Gryphon Mine Site
222
 
18.8
 
Gryphon Production Shaft
223
 
18.9
 
Ventilation Fans and Mine Air Heaters
223
 
18.10
 
Camp
224
 
18.11
 
Maintenance Shop
224
 
18.12
 
Warehouse
224
 
18.13
 
Emergency Facilities
224
 
18.14
 
Drill Core Logging Building
224
 
18.15
 
Security House and Truck Scales
225
 
18.16
 
Fuel Storage and Dispensing
225
 
18.17
 
Electrical Power
225
 
18.18
 
Back-up Electrical Power
225
 
18.19
 
Water Supply
225
 
18.20
 
Water Management
226
 
18.21
 
Development Waste Rock Management
229
 
18.22
 
Handling Infrastructure for Mined Materials
229
 
18.23
 
Concrete Batch Plant (Backfill)
229
 
18.24
 
Explosives Magazines
230
19
 
 
Market Studies and Contracts
231
 
19.1
 
Marketing
231
 
 
19.1.1
The Uranium Industry
231
 
19.2
 
Contracts
235
20
 
 
Environmental Studies, Permitting, and Social or Community Impact
236
 
20.1
 
Environmental Assessment
236
 
 
20.1.1
Provincial Requirements
236
 
 
20.1.2
Federal Requirements
237
 
20.2
 
Licensing and Permitting
238
 
20.3
 
Assessment Schedule and Estimated Costs
239
 
20.4
 
Environmental Considerations
239
 
 
20.4.1
Environmental Baseline Studies
239
 
 
20.4.2
Water Management
240
 
 
20.4.3
Metal Leaching/Acid Rock Drainage (ML/ARD) Potential
240
 
20.5
 
Social Considerations
242
21
 
 
Capital and Operating Costs
244
 
21.1
 
Basis of Cost Estimates
244
 
 
21.1.1
Amec Foster Wheeler Cost Estimation Approach
244
 
 
21.1.2
SRK Cost Estimation Approach
244
 
21.2
 
Capital Costs
245
 
21.3
 
Capital Cost Summary
245
 
21.4
 
Capital Cost Details
245
 
 
21.4.1
Owners Costs
246
 
 
21.4.2
Site Infrastructure
246
 
 
 
 
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21.4.3
Haul Road to McClean Lake
246
 
 
21.4.4
Surface Mobile Equipment
246
 
 
21.4.5
Underground Mine Development
247
 
 
21.4.6
Production Shaft and Ventilation Raises
247
 
 
21.4.7
Underground Mining Equipment
247
 
 
21.4.8
Underground Mining Infrastructure
247
 
 
21.4.9
Phoenix Freeze Infrastructure
247
 
 
21.4.10
Phoenix On-Site Processing Facilities
248
 
 
21.4.11
McClean Lake Mill Modifications
248
 
 
21.4.12
Decommissioning
252
 
21.5
 
Capital Cost Expenditure Schedule
252
 
21.6
 
Operating Costs
254
 
21.7
 
Operating Cost Summary
254
 
21.8
 
Operating Cost Details
254
 
 
21.8.1
Mine Operating Cost Estimate
254
 
 
21.8.2
Plant Feed Transportation Operating Cost Estimate
254
 
 
21.8.3
Process Operating Cost Estimates
255
 
 
21.8.4
G & A Operating Cost Estimate
256
22
 
 
Economic Analysis
257
 
22.1
 
Input and Assumptions
257
 
22.2
 
Canadian Royalties Applicable to the Project
258
 
22.3
 
Canadian Income and Other Taxes Applicable to the Project
258
 
22.4
 
McClean Lake Toll Milling Revenue
258
 
22.5
 
Pre-Tax Economic Analysis
259
 
 
22.5.1
Pre-Tax Cash Flow Model
259
 
 
22.5.2
Pre-tax Indicative Economic Results
261
 
 
22.5.3
Pre-tax Sensitivities
261
 
 
22.5.4
Production Case Price Sensitivity
263
 
22.6
 
Post-tax Economic Analysis
263
 
 
22.6.1
Post-tax Cash Flow Model
263
 
 
22.6.2
Post-tax Indicative Economic Results
264
 
 
22.6.3
Post-tax Production Case Sensitivity
265
23
 
 
Adjacent Properties
265
24
 
 
Other Relevant Data and Information
266
 
24.1
 
Project Risks
266
 
 
24.1.1
Mineral Resources within PEA Design Plan
266
 
 
24.1.2
Ground Water Inflow
266
 
 
24.1.3
Geotechnical
266
 
 
24.1.4
Jet Bore Mining Method
266
 
 
24.1.5
Radiation Exposure
267
 
 
24.1.6
Schedule for Permitting and Approvals
267
 
 
24.1.7
Metallurgy and Process
267
 
 
24.1.8
Capital and Operating Costs
267
 
24.2
 
Project Opportunities
268
 
 
24.2.1
Mineral Resource Expansion
268
 
 
24.2.2
Haulage Road Funding
268
 
 
24.2.3
High Grade Uranium Mining and Handling
268
 
 
24.2.4
Increase Phoenix Mining Rate
269
 
 
24.2.5
Processing
269
25
 
 
Interpretation and Conclusions
270
 
25.1
 
General Conclusions
270
 
25.2
 
Geology and Mineral Resources (RPA)
270
 
25.3
 
Geotechnical
271
 
25.4
 
Hydrogeology
272
 
25.5
 
Mining
272
 
25.6
 
Metallurgy and Process
273
 
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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25.7
 
Waste Management
273
 
25.8
 
Water Management
274
 
25.9
 
Environmental and Permitting
274
 
25.10
 
Project Economics
274
26
 
 
Recommendations
276
 
26.1
 
Geology and Mineral Resources (RPA)
277
 
26.2
 
Geotechnical
280
 
26.3
 
Hydrogeology
280
 
26.4
 
Mining
280
 
26.5
 
Water Management
281
 
26.6
 
Mineral Processing
281
 
26.7
 
Geochemistry and Waste Management
282
 
26.8
 
Environmental and Social
282
27
 
 
References
283
28
 
 
Certificates of Qualified Persons
286
 
 
 
 
 
 
 
 
 
 
 
 
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List of Tables
 
Table 1‑1: Wheeler River Property Mineral Resource Estimate Summary – January 30, 2018
1
Table 1‑2: LOM Lateral Development Estimate
11
Table 1‑3: Wheeler River Project Capital Cost Estimate
15
Table 1‑4: Wheeler River Project Operating Cost Estimate
15
Table 4‑1: Land Tenure Details
25
Table 6‑1: Exploration and Development History
34
Table 6‑2: SRK Mineral Resource Estimate as of November 17, 2010 (100% Basis) Denison Mines Corp. – Phoenix Deposit
35
Table 6‑3: RPA Mineral Resource Estimate as of December 31, 2012 (100% Basis) Denison Mines Corp. – Phoenix Deposit
35
Table 6‑4: RPA Mineral Resource Estimate as of May 28, 2014 (100% Basis) Denison Mines Corp. – Phoenix Deposit
35
Table 6‑5: RPA Mineral Resource Estimate as of September 25, 2015 (100% Basis) Denison Mines Corp. – Phoenix Deposit and Gryphon Deposits
35
Table 10‑1: Wheeler River Property Drilling Statistics
62
Table 10‑2: Phoenix Drilling Statistics
64
Table 10‑3: Gryphon Drilling Statistics
69
Table 10‑4: Gryphon Deposit Mineral Intersections
69
Table 11‑1: Quality Control Sample Allocations
86
Table 13‑1: Feed Sample Preparation
99
Table 13‑2: Phoenix Deposit Composite Test Sample Assay
99
Table 13‑3: Phoenix Zone U3O8 Product Assay
101
Table 13‑4: Feed Sample Preparation
102
Table 13‑5: Gryphon Deposit Composite Test Sample Assay
103
Table 13‑6: Modal Mineralogy of Gryphon Deposit Sample
103
Table 13‑7: Gryphon Residue Settling
105
Table 13‑8: Gryphon Zone U3O8 Product Assay
106
Table 14‑1: RPA Mineral Resource Estimate – Wheeler River Project – January 30, 2018
107
Table 14‑2: Vulcan Database Records
108
Table 14‑3: Summary of Gryphon Wireframe Models
118
Table 14‑4: Descriptive Statistics of Gryphon Uranium Assay (% U3O8) by Domain
126
Table 14‑5: Statistics of Gryphon Capped Assays by Domain
127
Table 14‑6: Basic Statistics of Grade and GxD Composites for Phoenix Deposit Zones A and B HG and LG Domains
130
Table 14‑7: Descriptive Statistics of Gryphon Deposit Composite Uranium Assay by Domain
133
Table 14‑8: Phoenix Block Model Parameters
134
Table 14‑9: Phoenix Block Model Variables
135
Table 14‑10: Phoenix Deposit Block Model Interpolation Parameters
136
Table 14‑11: Gryphon Block Model Parameters
136
 
 
 
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Table 14‑12: Gryphon Block Model Variables
137
Table 14‑13: Gryphon Block Model Estimation Parameters
142
Table 14‑14: Volume Comparison for Wireframe and Blocks by Domain
143
Table 14‑15: Statistics of Block Grades Compared to Composite Grades by Domain
144
Table 14‑16: Phoenix Deposit Indicated Mineral Resource Sensitivity to Cut-Off Grade
147
Table 14‑17: Gryphon Deposit Cut-Off Grade Calculation
148
Table 14‑18: Gryphon Deposit Inferred Mineral Resource Sensitivity to Cut-Off Grade
148
Table 14‑19: Gryphon Histogram Summary Statistics of NN Distance vs. Classification
153
Table 14‑20: RPA Mineral Resource Estimate - Wheeler River Project – January 30, 2018
153
Table 16‑1: Phoenix – Conversion of Indicated Mineral Resources to MR within PEA
171
Table 16‑2: Phoenix – Conversion of Inferred Mineral Resources to MR within PEA
172
Table 16‑3: Gryphon – Conversion of Inferred Mineral Resources to MR within PEA
174
Table 16‑4: Relative Distribution of Mining Methods
176
Table 16‑5: JBS Method Productivity Comparison
179
Table 16‑6: Gryphon Stacked Mining Wireframes (Lenses)
181
Table 16‑7: LOM Lateral Development Requirements
192
Table 16‑8: LOM Vertical Development Requirements
193
Table 16‑9: Estimated Underground Equipment Requirements
193
Table 16‑10: Waste Rock Broken and Backfill Quantities
194
Table 16‑11: Options Considered for Vertical Development
195
Table 16‑12: Freeze Infrastructure Alternatives Considered
196
Table 16‑13: Wheeler River Project Production Schedule
199
Table 16‑14: Wheeler River Project – Planned Ventilation Phases
201
Table 17‑1: Co-Milling Production Scenario
213
Table 20‑1: Summary of Trace Element Concentrations in the Mineralized Rock
241
Table 20‑2: Summary of Trace Element Concentrations in the Waste Rock
242
Table 21‑1: Wheeler River Project Capital Cost Summary
245
Table 21‑2: Site Infrastructure Capital Costs
246
Table 21‑3: Phoenix Underground Process Equipment Capital Cost Estimate
248
Table 21‑4: Complete Project Cost Estimate for Gryphon Zone Mill Modifications
250
Table 21‑5: Complete Project Cost Estimate for Phoenix Deposit Mill Modifications
251
Table 21‑6: Saskatchewan Uranium Decommissioning Financial Assurance Packages
252
Table 21‑7: Wheeler River Project Capital Cost Schedule
253
Table 21‑8: Wheeler River Project Operating Cost Estimate
254
Table 21‑9: Gryphon Milling Operating Cost Estimate
255
Table 21‑10: Phoenix Milling Operating Cost Estimate
256
Table 22‑1: Wheeler River Project Pre-tax Cash Flow Model
260
Table 22‑2: Sensitivity of NPV (8%)
261
Table 22‑3: Sensitivity of IRR%
262
 
 
 
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Table 22‑4: Base Case Cash flow Model: Pre-tax vs Post-tax Comparison
266
Table 22‑5: Production Case Cash Flow Model: Pre-tax vs Post-tax Comparison
267
 
List of Figures
 
Figure 1‑1: Phoenix A Zone Cross-Section Showing Tent Freeze Wall Arrangement (Looking NE)
8
Figure 1‑2: Isometric View - Gryphon 3D Mine Model (Looking N)
9
Figure 1‑3: Isometric View - Connection Drift - Phoenix Phase Air Flows (Looking S)
11
Figure 4‑1: Wheeler River Project Location Map
27
Figure 4‑2: Wheeler River Property Map
28
Figure 7‑1: Regional Geology and Uranium Deposits
38
Figure 7‑2: Simplified Geological Map of Athabasca Basin
39
Figure 7‑3: Cross Section of Wheeler River Athabasca and Basement Rock Types
42
Figure 7‑4: Wheeler River Property Basement Geology
44
Figure 7‑5: WS Reverse Fault and the Phoenix Deposit
47
Figure 7‑6: Gryphon Representative Cross-section.
48
Figure 7‑7: Cross-section of the Gryphon Deposit Showing Significant Interpreted Structures.
53
Figure 7‑8: 3D Isometric Longitudinal View of the Gryphon Deposit (shown as mineralized wireframes using a 0.05% U3O8 cut-off and minimum thickness of 2 metres)
55
Figure 8‑1: Schematic of Unconformity Type Uranium Deposit
58
Figure 8‑2: Various Models for Unconformity Type Deposits of the Athabasca Basin
59
Figure 10‑1: Phoenix Deposit Drill Hole Location Map
66
Figure 10‑2: Gryphon Deposit 2013 Drill Hole Location Map
68
Figure 10‑3: Gryphon Deposit 2017 Drill Hole Location Map
70
Figure 10‑4: Calibration Curve for Geiger-Meuller SN 3818 Probe
73
Figure 11‑1: USTD1 Analyses
81
Figure 11‑2: USTD2 Analyses
81
Figure 11‑3: USTD3 Analyses
82
Figure 11‑4: USTD4 Analyses
82
Figure 11‑5: USTD5 Analyses
83
Figure 11‑6: USTD6 Analyses
83
Figure 11‑7: Blank Sample Analyses Results
84
Figure 11‑8: Field Duplicate Analyses
85
Figure 11‑9: BLA4 Analyses
86
Figure 11‑10: U3O8 DNC Versus ICP-OES Assay Values
87
Figure 12‑1: WR-318 Radiometric versus Assay % U3O8 Values
91
Figure 12‑2: WR-334 Radiometric versus Assay % U3O8 Values
92
Figure 12‑3: WR-273 Radiometric versus Assay % U3O8 Values
92
Figure 12‑4: WR-435 Radiometric versus Assay % U3O8 Values
93
Figure 12‑5: WR-548 Radiometric versus Assay % U3O8 Values
93
 
 
 
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Figure 12‑6: WR-525 Radiometric versus Assay % U3O8 Values
94
Figure 12‑7: WR-401 Radiometric versus Assay % U3O8 Values
94
Figure 12‑8: WR-306 Radiometric versus Assay % U3O8 Values
95
Figure 12‑9: WR-539 Radiometric versus Assay % U3O8 Values
95
Figure 12‑10: WR-560 Radiometric versus Assay % U3O8 Values
96
Figure 12‑11: WR-573D1 Radiometric versus Assay % U3O8 Values
96
Figure 12‑12: WR-582 Radiometric versus Assay % U3O8 Values
97
Figure 12‑13: WR-584B Radiometric versus Assay % U3O8 Values
97
Figure 13‑1: Gryphon Zone Leaching Kinetics
104
Figure 14‑1: Phoenix Deposit Zones A and B Drill Hole Locations
109
Figure 14‑2: Phoenix Deposit Zone A Basement Drill Hole Locations
110
Figure 14‑3: Gryphon Deposit Drill Hole Locations
111
Figure 14‑4: Phoenix Deposit Zone A Typical Cross-Section Including WR-435 with HG and LG Domains
113
Figure 14‑5: Phoenix Deposit Zone A Typical Cross-Section Including WR-525 with HG and LG Domains
114
Figure 14‑6: Phoenix Deposit Zone A Typical Cross-Section Including WR-401 with HG and LG Domains
115
Figure 14‑7: Phoenix Deposit Zone B Typical Cross-Section Including WR-294 with HG and LG Domains
116
Figure 14‑8: Phoenix Deposit Zone A Basement Longitudinal Section
117
Figure 14‑9: Gryphon Deposit Geologic Cross-Section Schematic of Mineralization
120
Figure 14‑10: Gryphon Deposit Wireframes at Drill Index Line 5000 Cross-section (Looking NE)
121
Figure 14‑11: Logarithmic Plot of Dry Bulk Density versus Uranium Grade – Phoenix Deposit
123
Figure 14‑12: Dry Bulk Density Wax versus Dry/Wet Methods – Phoenix Deposit
123
Figure 14‑13: Logarithmic Plot of Dry Bulk Density versus Uranium Grade – Gryphon Deposit
125
Figure 14‑14: Zone A1-HG (1001) Log Normal Probability and Histogram Plot – Gryphon Deposit
128
Figure 14‑15: Grade Composite Histograms for Phoenix Deposit Zones A and B HG and LG Domains
131
Figure 14‑16: Grade versus Density Plots for Phoenix Deposit Zones A and B HG and LG Domains
132
Figure 14‑17: Phoenix Deposit Zone A 3D Block Model
138
Figure 14‑18: Phoenix Deposit Zone A 3D HG Domain Block Model
139
Figure 14‑19: Gryphon Deposit Block Model Domains A1 and C1 (Looking North)
140
Figure 14‑20: Gryphon Deposit Easting Swath Plots Comparing Block Data with Nearest Neighbour and Inverse Distance Interpolations
145
Figure 14‑21: Gryphon Deposit Northing Swath Plots Comparing Block Data with Nearest Neighbour and Inverse Distance Interpolations
145
Figure 14‑22: Gryphon Deposit Vertical Swath Plots Comparing Block Data with Nearest Neighbour and Inverse Distance Interpolations
146
Figure 14‑23: Phoenix Indicated Mineral Resource Tonnes and Grade at Various Cut-Off Grades
147
Figure 14‑24: Gryphon Inferred Mineral Resource Tonnes and Grade at Various Cut-Off Grades
149
 
 
 
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Figure 14‑25: Phoenix Deposit Zone B Block Model Showing Inferred and Indicated Resources
151
Figure 14‑26: Histogram Classification of Gryphon Deposit based on Nearest Neighbour Distance (Class: 1=Measured, 2=Indicated, and 3=Inferred)
152
Figure 16‑1: Hydraulic Conductivity Data Compiled to Date, Wheeler River
157
Figure 16‑2: Vertical Sections through Gryphon (left) and Phoenix (right) Deposits with Geotechnical Aspects Noted
159
Figure 16‑3: Phoenix and Gryphon Structural Models
160
Figure 16‑4: Example of Rock Mass Condition in the Gryphon Offset Fault
161
Figure 16‑5: Small Scale Structural Features in Basement Lithologies Collected by SRK from 2015 Diamond Drilling
161
Figure 16‑6: Phoenix Conceptual Geotechnical Domains, Cross-section (left) and Isometric View
162
Figure 16‑7: Gryphon Conceptual Geotechnical Domains, Isometric View (left) and Cross-section
163
Figure 16‑8: Fair to Good Rock Mass Conditions in the Sandstone Domain
164
Figure 16‑9: Poor to Very Poor Rock Mass Conditions in the Broken Zone Domain (% Core Recovery Shown)
165
Figure 16‑10: Poor to Fair Rock Mass Conditions in the Unconformity Domain
165
Figure 16‑11: Fair Rock Mass Conditions in the Basement Domain (Gryphon Mineralization)
166
Figure 16‑12: Long Section along Phoenix Freeze Drift showing Expected Rock Mass Conditions
167
Figure 16‑13: Recommended Support Requirements for the Production Excavations (Q Support Chart of Grimstad and Barton, 1993), ESR=1.6.
168
Figure 16‑14: Phoenix Zone A Plan View – Low Grade Fringe on Mining Shape
170
Figure 16‑15: Phoenix Zones B1/B2 Plan View – High Grade and Low Grade Areas
171
Figure 16‑16: 3D View of Year 2000 Initial Cigar Lake JBS Test Cavities
177
Figure 16‑17: Schematic View of JBS
178
Figure 16‑18: Isometric View - Phoenix A Zone Tent Freeze and Jet Bore Drift
179
Figure 16‑19: Phoenix A Zone Cross-Section - Tent Freeze Wall Arrangement (Looking NE)
180
Figure 16‑20: Gryphon Vertical Section – Longhole Stoping Layout (Looking NE)
181
Figure 16‑21: Gryphon Plan View – Typical Level for Longhole Mining
182
Figure 16‑22: Skid Mounted Portable Slurry Plant
183
Figure 16‑23: Possible Blind Raise Bore Layout for the Phoenix Deposit (Looking NE)
184
Figure 16‑24: Enlarged View of Possible Blind Raise Bore Method for Phoenix Deposit
184
Figure 16‑25: Isometric View - Connection Drift - Phoenix Phase Air Flows
188
Figure 16‑26: Phoenix 3D Mine Model – Isometric View
189
Figure 16‑27: Phoenix Underground Central Infrastructure – Isometric View
189
Figure 16‑28: Schematic Section showing Phoenix Central Infrastructure
190
Figure 16‑29: Isometric View - Gryphon 3D Mine Model
191
Figure 16‑30: Vertical Section - Gryphon 3D Mine Model
192
Figure 16‑31: Wheeler River Project Schedule
198
Figure 16‑32: Alimakhek Scando 650 Construction Man Hoist
204
 
 
 
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Figure 17‑1: Phoenix Process Overview at Wheeler River
206
Figure 17‑2: 40-Tonne Highway Truck – Tarp Covered
208
Figure 17‑3: B-Train Tractor Trailer with Special Slurry Containers
208
Figure 17‑4: McClean Lake (JEB) Mill Process Overview
209
Figure 18‑1: Wheeler River Project Site Showing Phoenix and Gryphon Deposits
219
Figure 18‑2: Phoenix Site Conceptual Layout
220
Figure 18‑3: Gryphon Site Conceptual Layout
222
Figure 18‑4: Water Treatment Plant Conceptual Flow Diagram
228
Figure 18‑5: Schematic View of Concrete Batch Plant
230
Figure 21‑1: Scope of Modifications for Co-Milling Cigar Phase 1 and Gryphon Deposit
250
Figure 21‑2: Scope of Modifications for Co-Milling Cigar Lake and Phoenix Deposit
251
Figure 22‑1: NPV(8%) Sensitivity Graph
262
Figure 22‑2: IRR% Sensitivity Graph
262
Figure 26‑1: 2018 Planned Gryphon Expansion Drilling Locations
278
Figure 26‑2: 2018 Planned Wheeler River Regional Exploration Drilling Targets
279
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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1
Summary
 
1.1        Executive Summary
 
The Wheeler River Uranium Project is an advanced exploration stage joint venture owned 63.3% by Denison Mines Inc., a wholly owned subsidiary of Denison Mines Corp. (collectively, with its subsidiaries, “Denison”), 26.7% by Cameco Corporation (“Cameco”), and 10% by JCU (Canada) Exploration Company Ltd. (“JCU”). Denison is the operator of the joint venture.
 
Roscoe Postle Associates Inc. (“RPA”) was retained by Denison on behalf of the Wheeler River Joint Venture (“WRJV”) to prepare an updated mineral resource estimate for the Gryphon deposit in accordance with Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards for Mineral Resources and Mineral Reserves (“CIM Definitions (2014)”) incorporated by reference in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
The mineral resources for the Phoenix deposit were updated in a NI 43-101 technical report dated June 17, 2014 (the “2014 Phoenix Report”) and authored by William E. Roscoe, Ph.D., P.Eng., of RPA. The Phoenix mineral resources have not changed since the 2014 Phoenix Report and are included in this report.
 
The purpose of this technical report is to support the disclosure of the updated mineral resource estimate for the Gryphon deposit and update the total mineral resource estimate for the property. This technical report conforms to NI 43-101.
 
This report also includes relevant sections from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, dated March 31, 2016 (the “2016 PEA Report”), which was prepared by Ken Reipas, P.Eng., of SRK Consulting (Canada) Inc. (“SRK”), in accordance with the requirements of NI 43-101. Sections 13, 16, 17, 18, 19, 20, 21 and 22 of this report have been reproduced from the 2016 PEA Report which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014. Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the Prefeasibility Study (“PFS”) for the Property, which was commenced in the third quarter of 2016.
 
The updated Mineral Resource estimate for the Wheeler River Project is summarized in Table 1-1, including the updated mineral resource estimate for the Gryphon deposit as of January 30, 2018.
 
 
Table 1-1: Wheeler River Property Mineral Resource Estimate Summary – January 30, 2018
 
Deposit
Category
Tonnes
Grade(% U3O8)
Million lbs U3O(100% Basis)
Million lbs U3O(Denison 63.3%)
Gryphon
Indicated
1,643,000
1.7
61.9
39.2
Phoenix
Indicated
166,000
19.1
70.2
44.4
 
Total Indicated
1,809,000
3.3
132.1
83.6
 
 
 
 
 
 
Gryphon
Inferred
73,000
1.2
1.9
1.2
Phoenix
Inferred
9,000
5.8
1.1
0.7
 
Total Inferred
82,000
1.7
3.0
1.9
 
Notes:
1.
CIM Definitions (2014) were followed for classification of mineral resources.
2.
Mineral resources for the Gryphon deposit are estimated at an incremental cut-off grade of 0.2% U3O8 using a long-term uranium price of US$50 per lb, and a US$/CAD$ exchange rate of 0.75. The cut-off grade is based on incremental operating costs for low-grade material.
 
 
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3.
Mineral resources for the Phoenix deposit are reported above a cut-off grade of 0.8% U3O8. Mineral resources for the Phoenix deposit were last estimated in 2014 to reflect the expansion of the high-grade zone. As no new drilling has been completed at Phoenix since that time, the mineral resource estimates for the Phoenix deposit remain current.
4.
High grade mineralization was capped at 30% U3O8 and restricted at 20% U3O8 for the A1HG and capped at 20% U3O8 for the D1HG with no search restrictions.
5.
Low grade mineralization was capped at 20% U3O8 for the C1 domain with search restrictions applied to U3O8 grades greater than or equal to 10.0% U3O8.
6.
Low grade mineralization was capped at 15% U3O8 for the B1, B2, E1 and E2 domains with search restrictions applied to U3O8 grades greater than or equal to 10.0% U3O8 for the B1 domain and 5.0% U3O8 for the E2 domain.
7.
Low grade mineralization was capped at 10% U3O8 for the A1-A4, B3-B7, C4-C5, and D2-D4 domains with no search restrictions.
8.
Low grade mineralization was capped at 5% U3O8 for the D1 domain with no search restriction
9.
Bulk density is derived from grade using a formula based on 196 measurements from Phoenix and 279 measurements from Gryphon.
10.
A minimum mining width of 2 metres was used.
11.
Numbers may not add due to rounding.
 
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 hosts the high-grade Phoenix and Gryphon uranium deposits, Denison's exploration portfolio consists of numerous projects covering approximately 351,000 ha in the Athabasca Basin region, including 330,843 ha in the infrastructure rich eastern portion of the Athabasca Basin. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture, 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 64.22% interest in the J Zone deposit and Huskie discovery on the Waterbury Lake property. Each of Midwest, Midwest A, J Zone and Huskie is located within 20 km of the McClean Lake mill. Denison is also engaged in mine decommissioning and environmental services through Denison’s Environmental Services division.
 
1.2        Technical Summary

1.2.1
Property Description, Location and Access
 
The property is located along the eastern edge of the Athabasca Basin in northern Saskatchewan, Canada, approximately 35 km north-northeast of the Key Lake mill and 35 km southwest of the McArthur River uranium mine.
 
Access to the property is by road or air from Saskatoon. The property is well located with respect to all-weather roads and the provincial power grid. Vehicle access to the property is by the provincial highway system to the Key Lake mill then by the ore haul road between the Key Lake and McArthur River operations to the eastern part of the property. An older access road, the Fox Lake Road, between Key Lake and McArthur River, provides access to most of the northwestern side of the property. Gravel and sand roads and drill trails provide access by either four-wheel-drive or all-terrain-vehicle to the rest of the property.
 
1.2.2
Land Tenure
 
The property consists of 19 mineral claims totalling 11,720 ha with an annual requirement of CAD$293,000 in either in work or cash to maintain title to the mineral claims. Based on previous work submitted and approved by the province of Saskatchewan, title is secure until 2035.
 
Any uranium produced from the Wheeler River property is subject to uranium mining royalties in Saskatchewan in accordance with Part III of The Crown Mineral Royalty Regulations. There are no other back-in rights or royalties applicable to this property.
 
 
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There are no known environmental liabilities associated with the property, and there are no other significant factors and risks that may affect access, title, or the right or ability to perform work on the property. All the necessary permits for surface exploration on the property are in place and current.
 
1.2.3
History
 
The Wheeler River property has been explored since the late 1970s. In late 2004, Denison entered into an agreement with the joint venture partners to earn into a majority 60% interest and become operator of the joint venture. In May 2007 Denison met the earn-in requirements and shortly thereafter in 2008 the Phoenix deposit was discovered.
 
Drilling at the property from 2008 to 2014 further delineated the Phoenix uranium deposit, which occurs at the intersection of the Athabasca sandstone basal unconformity, a regional fault zone, and graphite-bearing pelitic gneiss basement rocks. A maiden resource estimate was completed for Phoenix in November 2010 by SRK and in December 2010, Golder Associates Ltd. (“Golder”) prepared an internal report for Denison on the Phoenix deposit titled “Wheeler River Project – Concept Study”. As drilling defined further mineralization, subsequent resource estimates were made on the Phoenix deposit in December 2012 and June 2014 by RPA.
 
Exploration drilling in early 2014 along the K-North trend resulted in the discovery of a new zone of mineralization, at what would become the Gryphon deposit, which is located approximately three kilometres northwest of the Phoenix deposit. A maiden resource estimate was completed for the Gryphon deposit in September 2015 by RPA and an updated NI 43-101 technical report was issued for the Wheeler River Project in November 2015.
 
In September 2015, Denison commissioned SRK and other consultants to prepare a PEA for the project including both the Phoenix and Gryphon deposits based on the exploration drilling completed on the property through to the end of the summer 2015 exploration program.
 
In January 2017, Denison executed an agreement with the partners of the WRJV that will result in an increase in Denison's ownership of the Wheeler River Project, to up to approximately 66% by the end of 2018. Under this agreement, Denison is funding 50% of Cameco’s ordinary share (30%) of joint venture expenses in 2017 and 2018. On January 31, 2018, Denison announced that it had increased its interest in the Wheeler River Project, based on spending on the project during 2017, from 60% to 63.3% in accordance with this agreement.
 
In September 2017, Denison commissioned RPA to prepare an updated mineral resource estimate for the Gryphon deposit in accordance with NI 43-101 reporting standards based on the additional exploration drilling completed on the property during 2016 and 2017, as described within this report.
 
1.2.4
Geology and Mineralization
 
The Wheeler River property is located near the southeastern margin of the Athabasca Basin in the southwest part of the Churchill Structural Province of the Canadian Shield. The Athabasca Basin is a broad, closed, and elliptically shaped, cratonic basin with an area of 425 km (east-west) by 225 km (north-south). The bedrock geology of the area consists of Archean and Paleoproterozoic gneisses unconformably overlain by up to 1,500 m of flat-lying, unmetamorphosed sandstones and conglomerates of the mid-Proterozoic Athabasca Group. The property is located near the transition zone between two prominent litho-structural domains within the Precambrian basement, the Mudjatik Domain to the west and the Wollaston Domain to the east. The Mudjatik Domain is characterized by elliptical domes of Archean granitoid orthogenesis separated by keels of metavolcanic and metasedimentary rocks, whereas the Wollaston Domain is characterized by tight to isoclinal,
 
 
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northeasterly trending, doubly plunging folds developed in Paleoproterozoic metasedimentary rocks of the Wollaston Supergroup, which overlie Archean granitoid orthogenesis identical to those of the Mudjatik Domain. The area is cut by a major northeast-striking fault system of Hudsonian Age. The faults occur predominantly in the basement rocks but often extend up into the Athabasca Group due to several periods of post-depositional movement.
 
Local geology comprises little-deformed late Paleoproterozoic to Mesoproterozoic Athabasca Group strata comprised of Manitou Falls Formation sandstones and conglomerates which unconformably overlie the crystalline basement and have a considerable thickness from 170 m over the quartzite ridge to at least 560 m on the western side of the property. Basement rocks beneath the Phoenix and Gryphon deposits are part of the Wollaston Domain and are comprised of metasedimentary and granitoid gneisses. The metasedimentary rocks belong to the Wollaston Supergroup and include graphitic and non-graphitic pelitic and semipelitic gneisses, meta-quartzite, and rare calc-silicate rocks together with felsic and quartz feldspathic granitoid gneisses. Pegmatitic segregations and intrusions are common in all units with garnet, cordierite, and sillimanite occurring in the pelitic strata, indicating an upper amphibolite grade of metamorphism. Graphitic pelite and quartzite units appear to play important roles in the genesis of Athabasca Basin unconformity-type deposits. Thus the presence of extensive subcrop of both units: 18 km of quartzite and 152 line-km of conductors (assumed to be graphitic pelite), greatly enhances the economic potential of the Wheeler River property. The Wheeler River property is partially covered by lakes and muskeg, which overlie a complex succession of glacial deposits up to 130 m in thickness. These include eskers and outwash sand plains, well-developed drumlins, till plains, and glaciofluvial plain deposits. The orientation of the drumlins reflects southwesterly ice flow.
 
The Phoenix uranium deposit was discovered in 2008 and can be classified as an unconformity-related deposit of the unconformity-hosted variety. The deposit straddles the sub-Athabasca unconformity approximately 400 m below surface and comprises three zones (A, B, and C) which cover a strike length of 1.1 km. The deposit comprises an exceptionally high grade core surrounded by a lower grade shell. The deposit is interpreted to be structurally controlled by the WS shear, a prominent basement thrust fault which occurs in the footwall of a graphitic-pelite and the hanging wall of a garnetiferous pelite and quartzite unit. Mineralization within the Phoenix deposit lenses is dominated by massive to semi-massive uraninite associated with an alteration assemblage comprising hematite, dravitic tourmaline, illite and chlorite. Secondary uranium minerals, including uranophane, and sulphides are trace in quantity.
 
The Gryphon uranium deposit was discovered in 2014 and can be classified as an unconformity-related deposit of the basement-hosted variety. The deposit occurs within southeasterly dipping crystalline basement rocks of the Wollaston Supergroup below the regional sub-Athabasca Basin unconformity. The deposit is located from 520 m to 850 m below surface and has an overall strike length of 610 m, dip length of 390 m and varies in thickness between two metres and 70 m, depending on the number of mineralized lenses present. The mineralized lenses are controlled by reverse fault structures which are largely conformable to the basement stratigraphy and dominant foliation. The A, B and C series of lenses comprise stacked, parallel lenses which plunge to the northeast along a fault zone (“G-Fault”) which occurs between hanging wall graphite-rich pelitic gneisses and a more competent pegmatite-dominated footwall. A ubiquitous zone of silicification (“Quartz-Pegmatite Assemblage”) straddles the G-Fault and the A, B and C series of lenses occur in the hanging wall of, within, and in the footwall of the Quartz-Pegmatite Assemblage respectively. The D series lenses occur within the pegmatite-dominated footwall along a secondary fault zone (“Basal Fault”) or within extensional relay faults which link to the G-Fault. The E series lenses occur along the G-Fault, up-dip and along strike to the northeast of the A and B series lenses, within the upper basement or at the sub-Athabasca unconformity. Mineralization within the Gryphon deposit lenses is dominated by massive, semi-massive or fracture-hosted uraninite associated with an alteration assemblage comprising hematite, dravitic tourmaline, illite, chlorite and kaolinite. Secondary uranium minerals, including uranophane and carnotite, and sulphides are trace in quantity.
 
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1.2.5
Mineral Resources
 
The updated mineral resource estimate for the Gryphon deposit was prepared for Denison by RPA in accordance with CIM Definitions (2014). The effective date of the updated Gryphon mineral resource estimate is January 30, 2018. The mineral resource estimate for the Phoenix deposit with an effective date of May 28, 2014 remains current as no further resource drilling has been completed on this deposit. The Phoenix cut-off grade of 0.8% U3O8 is based on internal conceptual studies by Denison and a price of US$50/lb U3O8, while the cut-off grade of 0.2% U3O8 for Gryphon is based on RPA estimates using assumptions based on historical and known mining costs at mines operating in the Athabasca Basin, incremental operating costs for low-grade material and a price of US$55/lb U3O8.
 
For the Phoenix and Gryphon deposits, total indicated mineral resources are estimated at 1,809,000 tonnes at an average grade of 3.3% U3O8 containing 132.1 million pounds of U3O8. Total Inferred Mineral Resources are estimated at 82,000 tonnes at an average grade of 1.7% U3O8 containing 3.0 million pounds of U3O8.
 
RPA is not aware of any environmental, permitting, legal, title, taxation, socio-economic, marketing, political, or other relevant factors that could materially affect the mineral resource estimate.
 
Phoenix Deposit Estimation Methodology
 
The mineral resource estimate at Phoenix is based on data collected from several surface diamond drilling campaigns from 2008 to 2014. Uranium grade data is comprised of chemical assays on half split drill core samples. All assays were completed by Saskatchewan Research Council (“SRC”) Geoanalytical Laboratories in Saskatoon, Saskatchewan using the Inductively Coupled Plasma - Optical Emission Spectrometry (ICP-OES) method. Quality control and quality assurance (QA/QC) protocols for the chemical assays include the use of standard reference materials, blanks, check assays and duplicate samples. In those cases where drill core recovery is poor, chemical assays have been replaced with equivalent uranium grades obtained from down-hole radiometric probing.
 
Geology, structure, and the size and shape of the mineralized zones have been interpreted using data from 243 diamond drill holes which resulted in three dimensional wireframe models that represent 0.05% U3O8 grade envelopes. The mineralization model consists of a higher grade zone within an envelope of lower grade material, resulting in two main estimation domains - higher grade and lower grade. Additionally, a new domain representing a small zone of structurally controlled basement mineralization was added at the north end of the deposit.
 
Based on 196 dry bulk density determinations, Denison developed a formula relating bulk density to uranium grade which was used to assign a density value to each assay. Bulk density values were used to weight grades during the resource estimation process and to convert volume to tonnage.
 
Uranium grade times density (GxD) values and density (D) values were interpolated into blocks in each domain using an inverse distance squared (ID2) algorithm. Hard domain boundaries were employed such that drill hole grades from any given domain could not influence block grades in any other domain. Very high grade composites were not capped but grades greater than a designated threshold level for each domain were subject to restricted search ellipse dimensions in order to reduce their influence. Block grade was derived from the interpolated GxD value divided by the interpolated D value for each block. Block tonnage was based on volume times the interpolated D value.
 
The mineral resource estimate for the Phoenix deposit was classified as Indicated and Inferred based on drill hole spacing and apparent continuity of mineralization. The block models were validated by comparison of domain wireframe volumes with block volumes, visual comparison of composite grades
 
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with block grades, comparison of block grades with composite grades used to interpolate grades, and comparison with estimation by a different method.
 
Gryphon Deposit Estimation Methodology
 
The three-dimensional mineralized wireframes were created by Denison utilizing Gemcom software following detailed interpretation of the deposit geology and structure and then audited for completeness and accuracy by RPA using Vulcan software. The wireframes were defined using a threshold of 0.05% U3O8 and minimum thickness of two metres. One higher grade domain was defined within the A1 lenses and three higher grade domains were defined in the D1 lenses based on a threshold of 4.0% U3O8.
 
Based on 279 dry bulk density determinations, a polynomial formula was determined relating bulk density to uranium grade which was used to assign a density value to each assay. Bulk density values were used to weight grades during the resource estimation process and to convert volume to tonnage. GxD values and D values were interpolated into blocks measuring five metres by one metre by two metres using an ID2 algorithm since variograms were not considered appropriate to derive kriging parameters. Hard domain boundaries were employed at the wireframe edges, so that blocks within a given wireframe were only informed by grade data from that wireframe. For the A1 high-grade domain, assays were capped at 30% U3O8 with a search restriction applied to composite grades over 20% and for the D1 high-grade domains, assays were capped at 20% U3O8 with no search restriction. For the A1-A4, B3-B7, C4-C5 and D2-D4 low-grade domains, assays were capped at 10% U3O8. For the C1 low-grade domain, assays were capped at 20% U3O8 with a search restriction applied to composite grades over 10%. For the B1, B2, E1 and E2 low-grade domains, assays were capped at 15% U3O8 with search restrictions applied to composite grades over 10% U3O8 for the B1 domain and 5.0% U3O8 for the E2 domain. For the D1 low-grade domain, assays were capped at 5% U3O8. Block grade was derived from the interpolated GxD value divided by the interpolated D value for each block. Block tonnage was based on volume times the interpolated D value.
 
The mineral resource estimate for the Gryphon deposit was classified according to the drill hole spacing and the apparent continuity of mineralization, as either Indicated mineral resources (generally, drill hole spacing of 25 m x 25 m) or Inferred mineral resources (generally, drill hole spacing of 50 m x 50 m). The block models were validated by comparison of domain wireframe volumes with block volumes, visual comparison of composite grades with block grades, comparison of block grades with composite grades used to interpolate grades, and comparison with estimation by a different method.
 
1.2.6
Mineral Resources within PEA Design Plan
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
The 2016 PEA Report was based on the Indicated and Inferred mineral resources of the Phoenix and Gryphon deposits as of November 25, 2015. SRK’s methodology for estimating the mineralization to be included in the mine production plan included:
 
Selecting mining methods
 
 
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Cut-off grade of 0.4% U3O8 was estimated for longhole mining at Gryphon, refer to report Section 16.3.2. A cut-off grade of 2% U3O8 was used as a guide for jet bore mining at Phoenix, refer to report Section 16
Mineralization wireframes were evaluated at a zero cut-off grade
Wireframes were clipped to remove low grade areas below the cut-off grade
The final wireframes were evaluated in Gemcom to determine in situ tonnes and grades
Factors for external dilution and mining recovery were applied
 
Table 1-0 shows the Wheeler River mineral resources within the PEA design plan (“MR within PEA”).
 
Table 1-0: Wheeler River Mineral Resources within PEA Design Plan
 
Deposit
 
    Source
Kilo-
Grade
Mlb
Tonnes
% U3O8
U3O8
Phoenix
232.0
12.30
63.0
    Indicated mineral resources
Phoenix
7.8
6.27
1.1
    Inferred mineral resources
Gryphon
975.0
1.90
41.0
    Inferred mineral resources
 
SRK noted that this PEA is preliminary in nature. MR within PEA are sourced partially from Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 
1.2.7
Hydrogeology and Mine Geotechnical
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
The following hydrogeological and geotechnical characteristics of the project were considered in the mining study:
 
The Phoenix deposit is located at the unconformity and is subject to high pressure water in the overlying sandstone.
The Gryphon deposit is located in basement rocks and is considered protected from the water bearing sandstone.
Non-routine water inflows could be as high as 1,500 m3/h.
At Phoenix, the geotechnical assessment indicates very poor rock mass conditions in the immediate hangingwall. Ground conditions within the deposit are generally poor to fair. Basement rock development will generally be in fair to good rock mass conditions.
Generally, fair to good ground conditions are expected for the Gryphon deposit, with localized zones of lower quality rock mass attributed to fault structures.
Phoenix requires ground freezing to mitigate high water pressures and to help strengthen the poor hangingwall rock mass conditions.
Geotechnical conditions at Gryphon indicate conventional mining methods are applicable.
 
 
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1.2.8
Mining
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
Mining Methods
 
Jet bore system (JBS) mining was selected for the high grade Phoenix Zones A and B1, similar to the mining method utilized at the Cigar Lake mine. This mining method requires freeze wall protection in a tent configuration (Figure 1-1).
 
 
 
 
Figure 1-1: Phoenix A Zone Cross-Section Showing Tent Freeze Wall Arrangement (Looking NE)
 
The JBS mining method requires an access drill drift within basement (waste) rock below the mineralization (Figure 1-1). A pilot hole is drilled up into the deposit equipped with a rotating high pressure water jet capable of cutting the surrounding mineralization. A slurry of water and loose broken rock flows by gravity out of the cavity created, down into a receiving car next to the jet bore machine. At the Cigar Lake mine, the JBS method has successfully excavated cavities in the range of 4 m to 7 m in diameter. Mined out cavities will be filled with concrete that withstands the force of the water jet when an adjacent cavity is mined. The JBS method allows for mine operators to carry out their work in a protective environment to ensure exposure to high grade mineralization is minimized for all personnel.
 
Conventional longhole open stoping with backfill is planned for the Gryphon deposit. No freeze wall protection is needed due to the location of the deposit well below the unconformity in basement rock. (Figure 1-2)
 
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Figure 1-2: Isometric View - Gryphon 3D Mine Model (Looking N)
 
Table 1-1 shows the relative distribution of the planned mining methods.
 
Table 1-1: Relative Distribution of Mining Methods
 
 
 
Mining Method Distribution
Mining Method
Deposit
by Tonnes
by Pounds U3O8
Jet Bore System
Phoenix
20%
61%
Longhole Stoping
Gryphon
80%
39%
 
 
Other Mining Methods Considered
 
The geometry at the Phoenix Zones A and B1 is also well suited for a blind raise boring mining method. This method was successfully tested at the McArthur River mine, but it was not incorporated into its life-of-mine (“LOM”) plan.
 
This method was not selected for the Phoenix deposit for the following reasons:
 
On an overall basis it was considered less productive than the JBS method
Increased lateral development requirements
 
Potential productivity improvements to the blind boring method may be possible by blasting into the cavity using longhole drilling. This was not considered as part of this study.
 
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Conceptual 3D Mine Model
 
Several different configurations are possible when considering how to provide underground mining access to the Gryphon and Phoenix deposits. An important aspect of the design approach was to maximize synergy between the two deposits. The distance between the two, at approximately three kilometres, is such that the question must be answered as to whether it is best to connect them underground, or to develop them with separate accesses from surface.
 
Aspects considered by SRK in the mine access design process included:
 
Minimizing capital costs
Maximizing synergy between the two deposits, including ability to move workers, materials and equipment from surface and between deposits
Providing sufficient air flows without exceeding rule-of-thumb air velocities
Moving the mobile mining fleets underground
Providing services to each deposit including, mine dewatering, electrical power, second exit
Providing additional services for Phoenix including, brine piping for freeze walls, high grade uranium slurry transport and slick line for concrete for JBS backfilling
 
The design approach selected connects the two deposits underground with a 2.8 km (line distance) connection drift driven from Gryphon to Phoenix where it is positioned safely in the basement rock below the deposit (Figure 1-3). For Gryphon, the mine design includes a full service production shaft and a bare ventilation exhaust raise to support underground development and production. Heated fresh air will be delivered through the shaft with return air up the ventilation raise. Later in the mine life with Gryphon mining completed, Phoenix will receive fresh air from Gryphon through the connection drift and Phoenix exhaust air will be routed to surface through an additional ventilation raise at Phoenix.
 
Blind bored shafts have been selected for vertical access in favour of typical full face shaft sinking with cover grouting or freeze curtain protection. Blind bored shafts appear to offer competitive costs and construction schedules. The method includes a comprehensive surface pre-grouting program followed by blind boring with the shaft full of water. After dewatering, a concrete liner will be installed over the full length and grouted into basement rock. The main advantage is virtually eliminating the risk of unexpected shaft water inflow during shaft construction.
 
Table 1-2 shows the estimated LOM lateral development requirements.
 
 
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Figure 1-3: Isometric View - Connection Drift - Phoenix Phase Air Flows (Looking S)
 
 
Table 1-2: LOM Lateral Development Estimate
 
 
Gryphon
Phoenix
Total
Lateral Development
(m)
(m)
(m)
Connection Drift
3,239
 
3,239
Other Capitalized Development
6,588
6,310
12,898
Total Capitalized
9,827
6,310
16,137
Expensed Development
4,160
4,651
8,811
Total Lateral Development
13,987
10,961
24,948
 
 
Production Schedule
 
The nominal production rates selected for this study are:
 
Gryphon – 7 year mine life, at 6.0 Mlbs U3O8 per year (399 t/d)
Phoenix – 9 year mine life, at 7.0 Mlbs U3O8 per year (73 t/d)
 
SRK defined a five-year pre-production period from January 2021, when the project is assumed to be permitted, until it reaches commercial production in December 2025. The project production period is 16 years from January 2026 to the end of 2041.
 
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Underground Infrastructure and Services
 
Planned underground infrastructure and services include:
 
Definition drilling - The Phoenix deposit is well drilled. For the Gryphon deposit, SRK planned an additional 7,800 m of NQ underground drilling to tighten the average pierce point spacing in the mineralized lenses to 25 x 25 m.
Waste rock handling - Waste rock not needed for backfill will be trucked to a truck dump near the Gryphon shaft and hoisted to surface in one of the skips. The surface site layout includes an area designated for waste rock storage.
Low grade conventional mineralization handling at Gryphon - This material will be hoisted using the other skip and the other side of the loading pocket. Low grade material will be fed to the loading pocket from a separate mineralization handling system.
High grade material handling at Phoenix - Broken mineralization and water from the jet boring unit will be crushed underground and fed into a small ball mill. The high grade slurry produced will be pumped to surface through a steel pipeline installed in the Phoenix ventilation raise.
Freeze wall infrastructure - Phoenix underground freeze infrastructure will include a heat exchanger for the chilled brine and an underground brine circulation system from the heat exchanger to the freeze holes. Freeze holes will be drilled to lengths of approximately 75 m at a 4 m spacing from two dedicated freeze drifts.
Mine ventilation - Ventilation estimates were based on comparisons to other Athabasca Basin uranium mines and were selected to ensure the planned mine development would be adequately ventilated. SRK estimated the required mine ventilation at 302 cms for Gryphon, and 240 cms for Phoenix.
Mine dewatering - The system is designed for a capacity of 2,250 m3/h. The main sumps and pumps will be located at the Gryphon mine. Phoenix mine water will be transferred to the Gryphon main sumps, largely by gravity, through pipe lines installed in the connection drift.
Electrical power distribution - Power is expected to be sourced from the Provincial power grid and will feed a main 13.8 kV substation located on surface near the Gryphon shaft, which will then be fed underground through the Gryphon shaft and Phoenix ventilation raise.
Equipment maintenance - Fully serviced multi-bay underground maintenance shops will be constructed near the Gryphon shaft and at the Phoenix mine for servicing equipment.
Refuge stations - Five permanent refuge stations are planned as well as three portable units that can be moved with development crews.
 
1.2.9
Mineral Processing
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
This PEA is based on the assumption that mill feed from Wheeler River will be trucked to an existing uranium mill in northern Saskatchewan for processing under a custom milling agreement. Preliminary process test work was completed for the Phoenix deposit in 2014, and for the Gryphon deposit in 2015. The results were used to support process design criteria suitable for the Wheeler River feeds at a regional acid leach mill.
 
 
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At this time, custom milling at the JEB uranium mill on the McClean Lake site is considered the most likely scenario due to capacity constraints (in production and tailings management) at other regional milling facilities. Pursuing this option requires the construction of a new 45 km section of haul road between the McArthur River mine site and the Cigar Lake mine site to connect existing roads that otherwise run from the McClean Lake mill to the Key Lake mill. The cost estimate for this haul road is included in the project capital.
 
The production plan for the Gryphon and Phoenix deposits aligns well with making use of available capacity at the McClean Lake mill while co-milling with anticipated feeds from Cigar Lake mine. The expected peak mill production rate of up to 24 M pounds per year (lb/yr) U3O8 could occur while co-milling Cigar Lake Phase 1 high grade and Gryphon deposit low grade feeds, matching the intended total license capacity of the mill.
 
The current scope of mill modifications approved for construction at McClean Lake is focused on enabling the full capacity of 18 M lb U3O8/yr milling of high grade Cigar Lake Phase 1 feed through the #2 leach circuit, while a notional 4 M lb U3O8/yr of co-milling capacity exists in the #1 leach circuit for a total leach capacity of 22 M lb U3O8/yr. In the expected mill operating scenario there is no constraint to production of 18 M lb U3O8/yr of Cigar Lake feed through the #2 leach circuit, whereas production capacity constraints are identified for the Gryphon deposit feed due to tonnage restrictions in the #1 leach circuit.
 
In order to co-mill the full tonnage of the Gryphon deposit feed with the Cigar Lake Phase 1 feed, expansion of the #1 leaching circuit and solid/liquid separation circuits’ capacities are required. The McClean Lake #1 leach circuit currently has insufficient retention capacity to provide the estimated leach time. One or two additional tanks would be required to augment the existing capacity to efficiently process the Gryphon deposit feed.
 
The counter current decantation (CCD) circuit used for solid-liquid separation at McClean Lake is anticipated to be a bottleneck in mill production. A conventional approach to wash poorly settling solids is pressure filtration. For the base case to reach full Cigar Lake Phase 1/Gryphon co-milling capacity within the design recovery rate, two new pressure filters are proposed to supplement the existing CCD thickener circuit. The proposed solid-liquid separation operation is as follows:
 
Cigar Lake leach residue slurry from the primary thickener underflow feeds to a new dedicated high grade pressure filter. The washed cake is sent directly to tailings neutralization.
Gryphon leach residue slurry is split into coarse and fine fractions using a hydrocyclone, and then:
 
 
The coarse fraction is sent to the existing CCD thickener circuit. This way, CCD tonnage is reduced to an acceptable rate and settling performance is improved at the same time.
 
The fines fraction is sent to a new low grade pressure filter. The washed cake is sent directly to tailings neutralization.
 
To co-mill the full tonnage of the Phoenix zone feed with the Cigar Lake Phase 2 feed, some minor re-configurations of the slurry receiving, leaching, and solid/liquid separation circuits are required. After the pregnant solution is separated from the leached solids residue, the downstream circuits (clarification, SX, carbon columns, precipitation, calcining, packaging, crystallization) are assumed from stated expansion plans to be capable of processing 24 M lb U3O8/yr.
 
The metallurgical test results indicate the Gryphon and Phoenix deposits are suitable for processing through the McClean Lake mill. Overall uranium process recovery has been estimated at 97.0% for Gryphon (due to lower grade), while Phoenix recovery is estimated at 98.1%.
 
 
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1.2.10
Surface Infrastructure
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
Planned surface infrastructure at the Gryphon site includes:
 
Production shaft, hoist house and headframe, and ventilation raise
Main fresh air fans and mine air heater
Fully serviced camp
Mine buildings including administration office, change house, maintenance shop, warehouse, emergency services building, and laboratories
Electrical sub-station supplied by a new overhead power supply line
Back-up diesel power generators
Water supply
Water management ponds and water treatment plant
Waste rock storage facilities for special waste, potentially acid generating (PAG) waste, and clean waste
Fuel storage facility
Backfill preparation plant
 
Planned surface infrastructure at the Phoenix site includes:
 
Ventilation raise collar with main exhaust air fans
Freeze plant infrastructure
High grade slurry load out facility
 
1.2.11
Environmental and Permitting
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
There are no recognized environmental fatal flaws associated with this project. All potential environmental impacts can be successfully mitigated through the implementation of industry best practices. The most significant environmental concern associated with the project will be the management of routine and non-routine mine water effluent.
The project will require completion of a federal and provincial environmental assessment. This assessment will be completed as a joint environmental assessment. It is estimated the assessment will require approximately 24 to 36 months to complete following the submission of a detailed project description.
 
 
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1.2.12
Capital and Operating Costs
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
Capital costs are expressed in 2015 Canadian dollars to a bottom line accuracy of +/- 40%. Initial capital costs are based on the five-year period from January 1, 2021 through to December 31, 2025. Sustaining capital costs are for the period from January 1, 2026 through to the end of 2041.
 
The Wheeler River project total capital cost estimate is $1,103 million including a contingency of 26% as shown in Table 1-3, comprising $560 million initial capital and $543 million sustaining capital.
 
 
Table 1-3: Wheeler River Project Capital Cost Estimate
 
Capital Costs
Initial
Sustaining
Total
Direct
Indirect
Area
$M
$M
$M
$M
$M
Owners Costs
$25
$0
$25
$0
$25
Surface Infrastructure
$167
$7
$174
$138
$36
Mine
$219
$335
$554
$469
$85
Plant Feed Handling & Processing
$18
$60
$78
$51
$27
Decommissioning
$0
$40
$40
$32
$8
Subtotal
$429
$442
$871
$690
$181
Contingency
$131
$101
$232
$178
$54
Total Capital ($M)
$560
$543
$1,103
$868
$235
 
 
Operating costs have been estimated at $19.28 per pound U3O8 for the Gryphon deposit and $29.90 per pound U3O8 for the Phoenix deposit. Table 1-4 shows the composition of the projected operating cost estimates.
 
 
Table 1-4: Wheeler River Project Operating Cost Estimate
 
 
$/lb U3O8
Operating Costs Area
Gryphon
Phoenix
Mining
$3.45
$17.45
Surface Transportation
$1.63
$0.85
Processing
$8.03
$6.03
Toll Milling Fee
$2.00
$2.00
General & Administration
$4.17
$3.57
Total
$19.28
$29.90
 
 
1.2.13
Indicative Economic Results
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the
 
 
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updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
The PEA considers two pricing scenarios because of the long lead time to production (2026). Uranium price estimates were sourced from the Ux Consulting Company, LLC. (UxC) (Refer to Section 22.5.2 for details).
 
(1)
A Base case scenario using a long-term contract price of US$44.00/lb as of March 28, 2016.
(2)
A Production case price sensitivity using a long-term contract price of US$62.60/lb for the year 2026 (based on UxC’s Uranium Market Outlook Q1 2016) when the project production period begins.
 
An exchange rate of 1.35 CAD/USD was selected based on Bloomberg long term projections as of February 2016.
 
Pre-tax Indicative Economic Results
 
Base Case
 
The Wheeler River project (100% basis) indicative pre-tax base case economic results include:
 
An internal rate of return (IRR) of 20.4%
A net present value (NPV) at 8% discounting of $513 million
A pay-back period of approximately three years (from the start of production)
The break-even price for the project is estimated at approximately US$34/lb U3O8
 
Production Case
 
Using a uranium price of US$62.60/lb, with all other variables held constant, the project’s NPV at 8% discounting increases to $1,420 million, the IRR increases to 34.1%, and the pay-back period decreases to approximately 18 months (from the start of production)
 
 
Post-tax Indicative Economic Results
 
Base Case
 
Denison’s 60% ownership interest in the Wheeler River project yields the following indicative post-tax base case economic results:
 
An internal rate of return (IRR) of 17.8%
A net present value (NPV) at 8% discounting of $206 million
 
Production Case
 
Using a uranium price of US$62.60/lb, with all other variables held constant, the project’s post-tax NPV to Denison, at 8% discounting, increases to $548 million and the IRR increases to 29.2%.
 
SRK notes that this PEA is preliminary in nature, it includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 
 
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1.2.14
Risks and Opportunities
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
The Wheeler River project risks include:
 
The inclusion of Inferred mineral resources in the plant feed estimate.
The possibility of an unexpected ground water inflow causing loss of production and increased costs.
The JBS method has been developed specifically for the Cigar Lake deposit and there is a risk the method will not perform as well at Phoenix due to different orebody characteristics.
The possibility that it may take longer than planned to obtain full project regulatory approval, delaying the start of construction on the site.
This study is based on custom milling the Wheeler River plant feed at the McClean Lake mill, an existing uranium processing plant in northern Saskatchewan. There is a risk that sufficient plant capacity or tailings capacity may not be available for the Wheeler River feed, delaying the project or requiring additional capital to fund further modifications to the existing plant or the construction of a new processing plant.
The composite samples used for the metallurgical testing of the Gryphon and Phoenix deposits do not reflect the potential variability of the processing plant feed, and uranium milling recoveries of 97.0% for Gryphon and 98.1% for Phoenix may not be consistently achieved.
Capital and operating cost estimates developed as part of this study are at a scoping level, and there is a risk that actual costs will be higher than those estimated.
 
The Wheeler River project opportunities include:
 
Wheeler River is Denison’s flagship exploration property. There are many high priority exploration target areas, the most important of which consist of unconformity and basement targets in the Gryphon area. Future exploration may discover additional mineralization that could become part of the Wheeler River mining plan. During the winter 2016 program, drill testing within 200 metres north and northwest of the Gryphon deposit returned numerous high-grade intersections which have been reported in the Company’s press releases. These results are not included in the current resource estimate or PEA.
Annual production is constrained by available mineral process capacities. Opportunities to increase capacity may allow for increased mine production from Wheeler River.
It is likely that continuous improvements made by currently operating uranium mines will benefit the Wheeler River project. One area of possible benefit could be in the approved handling methods for high grade uranium.
 
1.2.15
Conclusions and Recommendations
 
Portions of this report section have been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the
 
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PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
The results of the PEA indicate that the Wheeler River project has a positive economic return at the base case assumptions considered. The results are considered sufficiently reliable to guide Denison’s management in a decision to further develop the project. This would typically involve the preparation of a PFS.
 
Assessment of each area of investigation completed as part of this PEA suggests recommendations for further investigations to improve the preliminary designs and to mitigate risks. The key recommendations arising from this study are described below.
 
Denison has already planned exploration drilling at Wheeler River for 2018 to focus on numerous targets in the vicinity of the Gryphon deposit.
Targeted geotechnical drilling is required with associated laboratory strength testing. Structural models at Phoenix and Gryphon should be updated considering the additional data. A geotechnical database quality control review should be completed to screen and to compile a robust geotechnical data set for use in mine design.
Further hydrogeological investigation should focus on hydraulic testing of permeable structures. Shallow hydrogeological testing should focus on areas of proposed shafts and raises, and should include testing of pumping wells and observation wells. Deep testing should include vibrating wire piezometer installation and other deep down-hole hydrogeology tests. A 2D axisymmetric numerical groundwater model should be constructed to estimate groundwater inflows for various stages of mine life.
A preliminary feasibility mining study should be undertaken once infill drilling has been completed at Gryphon. Alternative methods should be investigated for shaft sinking and development of the required ventilation raises. Locations for the shaft and raises should be selected based on field investigation and consideration of the geotechnical/structural model. Further investigation is recommended into the technical aspects of applying the JBS at Phoenix.
The design of surface water storage ponds and water treatment plant should be refined as estimates of mine water chemistry and flow become available. The existing surface hydrology data and suitability of the monitoring network should be reviewed. Long term meteorological data should be obtained for storm water management design. A water balance for the two mining sites should be determined.
Pre-feasibility level process engineering design and cost estimation should be undertaken for the Wheeler River site’s underground and surface plant feed handling facilities and for JEB mill modifications, based upon updated design criteria derived from the recommended test programs:
o
Perform optimization test work on Gryphon and Phoenix deposits for grinding, leaching and CCD circuits’ performance.
o
Re-confirm production of on-spec yellowcake. Test effluent and tailings treatment.
o
Perform test work to investigate potential for hydrogen evolution from the Gryphon and Phoenix deposits.
Should commercial negotiations proceed with the McClean Lake joint venture in respect of toll milling, design capacities should be validated for each of the downstream mill circuits (clarification, SX, carbon columns, precipitation, calcining, packaging, crystallization) and required equipment upgrades should be identified.
Tailings characterization is recommended in conjunction with further metallurgical testing. The process solutions, final effluent, and the final tailings slurry (solids and liquids) should be analyzed for a complete suite of major and trace elements, and mineralogical characterization should also be completed on the tailings solids. Tailings slurry should be subjected to an anoxic aging test to simulate changes that are likely to occur over the short to medium-term.
 
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Waste rock characterization is recommended using a staged approach, with static testing (acid base accounting tests) on a moderate number of samples from each deposit area, then kinetic testing – including both laboratory and field based tests on a representative subset of samples. This will determine requirements for segregation, storage and handling of the waste rock.
A detailed stakeholder engagement plan should be initiated to support the advancement of the project’s engineering and regulatory requirements. Comprehensive environmental and social baseline studies should be initiated to characterize the aquatic and terrestrial environment, heritage and archeological aspects of the project.
In the third quarter of 2016, the Wheeler River Joint Venture commenced a PFS. At the end of the PFS, a review of the project will be completed with recommendations for next steps. Should the project proceed into feasibility, work will focus on environmental baseline studies, engineering field programs, and engineering studies.
The Wheeler River Joint Venture plans to continue exploration on the Property in 2018. The Gryphon deposit remains open in numerous areas with significant potential for future resource growth. Priority target areas include: (1) Along strike to the northeast of the E series lenses, where both unconformity and basement potential exists; (2) Down plunge of the A and B series lenses; (3) Along strike to the northeast and southwest of the D series lenses; and (4) Within the currently defined D series lenses, where additional high-grade shoots may exist. In addition, very little regional exploration has taken place on the property in recent years, with drilling efforts focussed on Phoenix and Gryphon, which were discovered in 2008 and 2014 respectively. The property hosts numerous uranium-bearing lithostructural corridors which are under- or unexplored and have the potential for additional large, high-grade unconformity or basement hosted deposits. Exploration drilling is warranted along these corridors to follow-up on previous mineralized drill results, or to test geophysical targets identified from past surveys.
A CAD$13.1 million budget has been approved for the Wheeler River project in 2018. The budget includes exploration expenditures of CAD$9.5 million and evaluation expenditures of CAD$3.6 million. RPA has reviewed the preliminary plans for 2018 and concurs with the program planned for the Wheeler River Joint Venture in 2018.
 
2
Introduction
 
The Wheeler River Uranium Project is an advanced exploration stage joint venture owned 63.3% by Denison, 26.7% by Cameco Corporation (Cameco), and 10% by JCU (Canada) Exploration Company Ltd. (JCU). Denison is the operator of the joint venture.
 
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 hosts the high-grade Phoenix and Gryphon uranium deposits, Denison's exploration portfolio consists of numerous projects covering approximately 351,000 ha in the Athabasca Basin region, including approximately 330,000 ha in the infrastructure rich eastern portion of the Athabasca Basin. Denison's interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture, 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 64.22% interest in the J Zone deposit and Huskie discovery on the Waterbury Lake property. Each of Midwest, Midwest A, J Zone and Huskie is located within 20 km 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.
 
The Wheeler River property has been explored since the late 1970s. In late 2004 Denison entered into an agreement with the joint venture partners to earn into a majority 60% interest and become operator
 
 
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of the joint venture. In May 2007, Denison met the earn-in requirements and shortly thereafter in 2008 the Phoenix deposit was discovered.
 
Drilling at the property from 2008 to 2014 further delineated the Phoenix uranium deposit, which occurs at the intersection of the Athabasca sandstone basal unconformity, a regional fault zone, and graphite-bearing pelitic gneiss basement rocks. The Phoenix deposit consists of two separate lenses known as Zones A and B, located approximately 400 m below surface within a one-kilometre-long, northeast-trending mineralized corridor. A maiden resource estimate was completed for Phoenix in November 2010 by SRK Consulting (Canada) Inc. (“SRK”) and in December 2010, Golder Associates Ltd. (“Golder”) prepared an internal report for Denison on the Phoenix deposit titled “Wheeler River Project – Concept Study” (Golder, 2010). The concept study was used to provide guidance to the exploration teams for exploration strategy as well as to initiate basic geotechnical, hydrogeological, and environmental data collection programs. The conceptual study was primarily based on comparable operations with minimal site specific assumptions made. The study did not complete any mining method analysis. As drilling defined further mineralization, subsequent resource estimates were made on the Phoenix deposit in December 2012 and June 2014 by Roscoe Postle Associates (“RPA”).
 
Exploration drilling in early 2014 along the K-North trend resulted in the discovery of a new zone of mineralization, at what would become the Gryphon deposit, which is located approximately three kilometres northwest of the Phoenix deposit. A maiden resource estimate was completed for the Gryphon deposit in November 2015 by RPA and an updated technical report was issued for the Wheeler River Project in accordance with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”).
 
In September 2015, Denison commissioned SRK and other consultants to prepare a NI 43-101 Preliminary Economic Assessment (“PEA”) for the project including both the Phoenix and Gryphon deposits based on the exploration drilling completed on the property through to the end of the summer 2015 exploration program.
 
In September 2017, Denison commissioned RPA to prepare an updated mineral resource estimate for the Gryphon deposit in accordance with NI 43-101 based on the additional exploration drilling completed on the property during 2016 and 2017.
 
In January 2017, Denison executed an agreement with the partners of the Wheeler River Joint Venture (“WRJV”) that will result in an increase in Denison's ownership of the Wheeler River Project, to up to approximately 66% by the end of 2018. Under this agreement, Denison is funding 50% of Cameco’s ordinary share (30%) of joint venture expenses in 2017 and 2018. On January 31, 2018, Denison announced that it had increased its interest in the Wheeler River Project, based on spending on the project during 2017, from 60% to 63.3% in accordance with this agreement.
 
 
2.1
Basis of Technical Report
 
This technical report (including the portions thereof reproduced from the 2016 PEA Report) is based on the following sources of information:
 
November 17, 2010, SRK Consulting technical report, “Technical Report on the Phoenix Deposit (Zones A&B) - Wheeler River Project, Eastern Athabasca Basin, Northern Saskatchewan, Canada” (SRK, 2010)
Publicly available technical reports prepared by Cameco including November 2, 2012 “McArthur River Operation, Northern Saskatchewan, Canada” (Cameco, 2012a) and February 24, 2012 “Cigar Lake Project, Northern Saskatchewan, Canada” (Cameco, 2012)
 
 
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Technical report prepared by Roscoe Postle Associates (RPA), November 25, 2015, “Technical Report on a Mineral Resource Estimate for the Wheeler River Property, Eastern Athabasca Basin, Northern Saskatchewan, Canada” (RPA, 2015)
Technical report co-authored by Charles Edwards, P Eng., then of Amec Foster Wheeler, “Wheeler River Preliminary Economic Assessment – Process Aspects” January 21, 2016 (Amec, 2016)
Technical and cost information provided by Denison
Discussions with Denison technical and management personnel
Inspection of the project area and drill core during a site visit
Technical and cost information provided by Amec Foster Wheeler in the areas of metallurgy and mineral processing
Technical and cost information provided by Mr. Greg Newman, President of Newmans Geotechnique Inc. (ground freezing experts)
Technical information provided by the Saskatchewan Research Council (“SRC”)
Additional information from public domain sources
 
Significant contributions to this report were made by the following consulting firms:
 
RPA commissioned by Denison, responsible for report Sections 4 to 12, and 14, the summary of these sections in the Introduction and Summary, and the Interpretation and Conclusions and Recommendations related to these sections
SRK commissioned by Denison, responsible for report Sections 16 and 18 to 22, the summary of these sections in the Introduction and Summary, and the Interpretation and Conclusions and Recommendations related to these sections
SRC commissioned by Denison, responsible for report Sections 13 and 17, parts of Sections 21 and 24, the summary of these sections in the Introduction and Summary, and the Interpretation and Conclusions and Recommendations related to these sections
Newmans Geotechnique Inc. (NGI) commissioned by SRK, responsible for report Sections related to ground freezing including Sections 16.5.2, 16.8.3, 18.4 and 21.4.8
 
The PEA in this technical report is based on Mineral Resource Statements for the Gryphon and Phoenix deposits prepared by RPA as of November 2015. This technical report also includes a Mineral Resource Statement for the Gryphon deposit prepared by RPA as of January 2018. The Mineral Resource Statements were prepared following the guidelines of the Canadian Securities Administrators’ National Instrument 43-101 and Form 43-101F1 and is suitable for public disclosure.
 
The term “mineral resources within PEA design plan” (“MR within PEA”) is used in this technical report to represent portions of the Gryphon and Phoenix uranium mineral resources that have had mining parameters applied to them including cut-off criteria, external dilution and mining losses. MR within PEA are included in the Economic Analysis as uranium mill feed.
 
MR within PEA are sourced partially from Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
 
Unless otherwise stated, this technical report is based on Canadian currency and metric units of measure.
 
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2.2
Qualified Persons
 
This technical report is authored by SRK, reproducing sections of the 2016 PEA Report relevant to the PEA, and by RPA, providing an updated mineral resource estimate for the Gryphon deposit on the Wheeler River Property.
 
Mr. Mark B. Mathisen, C.P.G. was the principal author for RPA and Mr. Ken Reipas, P.Eng for SRK was the principal author for the compilation of the 2016 PEA Report and the reproduction of the PEA results in this technical report.
 
The following Qualified Persons have contributed to those sections of this technical report related to their areas of expertise. By virtue of their education, membership to a recognized professional association and relevant work experience, they are all independent QPs as this term is defined by NI 43-101.
 
Mr. Ken Reipas, P.Eng, SRK, mine design, mining costs, infrastructure, economics
Mr. Mark B. Mathisen, C.P.G., RPA, geology and mineral resource estimation
Mr. William E. Roscoe, PhD, P.Eng, RPA, geology and mineral resource estimation
Mr. Bruce Murphy, P.Eng, SRK, mine geotechnical
Mr. Michael Royle, P.Geo, SRK, hydrogeology
Mr. Tom Sharp, P.Eng, SRK, water management and treatment
Mr. Greg Newman, P.Eng, Newmans Geotechnique Inc, ground freezing
Ms. Kelly Sexsmith, P.Geo, SRK, waste rock geochemistry/management
Mr. Mark Liskowich, P.Geo, SRK, environmental, permitting, and social impact
Mr. Charles Edwards, P.Eng, SRC, metallurgical and mineral processing
 
Additional contributions to the PEA technical report were provided by:
 
Mr. Ross Greenwood, (SRK), mine geotechnical
 
Specific areas of responsibility for each QP are listed in the QP Certificates attached at the end of this technical report.
 
 
2.3
Qualifications of SRK and RPA
 
The SRK Group comprises more than 1,400 professionals, offering expertise in a wide range of resource engineering disciplines. The independence of the SRK Group is ensured by the fact that it holds no equity in any project it investigates and that its ownership rests solely with its staff. These facts permit SRK to provide its clients with conflict-free and objective recommendations. SRK has a proven track record in undertaking independent assessments of mineral resources and mineral reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies, and financial institutions worldwide. Through its work with a large number of major international mining companies, the SRK Group has established a reputation for providing valuable consultancy services to the global mining industry.
 
RPA is a group of technical professionals who have provided advice to the mining industry for over 30 years. During this time, RPA has grown into a highly respected organization regarded as a specialty firm of choice for resource and reserve work. RPA’s portfolio of customers includes clients in banking, government, major mining companies, exploration and development firms, law firms, individual investors, and private equity ventures. RPA has extensive experience in estimation of mineral resources and reserves within the Athabasca Basin in Northern Saskatchewan.
 
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2.4
Site Visit
 
The following RPA consultants visited the Wheeler River Project site:
 
Mr. Mark B. Mathisen, C.P.G., Principal Geologist, geology and mineral resource estimation, September 21 to September 22, 2017. His personal inspection of the property included visits to the Phoenix and Gryphon deposit sites, inspection of drill core, a review of the drill program, a review of logging procedures and discussions with Denison technical staff.
 
The following SRK consultant visited the Wheeler River Project site in relation to completion of the 2016 PEA Report:
 
Ken Reipas, Associate Consultant (Mining), on January 29, 2015. His personal inspection of the property included visits to the Phoenix and Gryphon deposit sites, inspection of drill core, an assessment of site access and local infrastructure and discussions with Denison technical staff.
 
Each of Charles Edwards of SRC and Greg Newman of Newman’s Geotechnique did not conduct a site visit of the Wheeler River Project site. For the work performed and confirmed by these qualified persons, a site visit was not required.
 
 
2.5
Declaration
 
This entire report section has been reproduced from the “Preliminary Economic Assessment for the Wheeler River Uranium Project, Saskatchewan, Canada”, SRK Consulting (Canada) Inc., March 31, 2016, which was based on the mineral resource estimates for the Gryphon deposit effective September 25, 2015 and the Phoenix deposit effective May 28, 2014.  Denison anticipates incorporating the updated mineral resource estimate for the Gryphon deposit disclosed herein in the PFS for the Property, which was commenced in the third quarter of 2016. The section has been reviewed and there are no material changes in the opinion of the qualified person.
 
 
SRK’s opinion contained herein and effective March 31, 2016 is based on information collected by SRK throughout the course of SRK’s investigations. The information in turn reflects various technical and economic conditions at the time of writing this report. Given the nature of the mining business, these conditions can change significantly over relatively short periods of time. Consequently, actual results may be significantly more or less favourable.
 
This report may include technical information that requires subsequent calculations to derive subtotals, totals, and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, SRK does not consider them to be material.
 
SRK is not an insider, associate or an affiliate of Denison, and neither SRK nor any affiliate has acted as advisor to Denison, its subsidiaries or its affiliates in connection with this project. The results of the technical review by SRK are not dependent on any prior agreements concerning the conclusions to be reached, nor are there any undisclosed understandings concerning any future business dealings.
 
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3
Reliance on Other Experts
 
 
3.1
SRK
 
SRK has not performed an independent verification of land title and tenure information as summarized in Section 4 of this report. SRK did not verify the legality of any underlying agreement(s) that may exist concerning the permits or other agreement(s) between third parties.
 
Mr. Reipas has relied on, and believes there is a reasonable basis for relying on, the following individual who has contributed the royalty and taxation information stated in this report, as noted below:
 
Mac McDonald, CFO Denison Mines Corp. for Sections 22.2, 22.3 and 22.6 (description of Saskatchewan royalties, description and application provincial/federal taxes, and post-tax economic results to Denison).
 
3.2
RPA
 
Sections 4 to 12 and 14, as well as the respective portions of Sections 1, 25, and 26 of this report have been prepared by RPA for Denison. The information, conclusions, opinions, and estimates contained herein are based on:
Information available to RPA at the time of preparation of this report,
 
Assumptions, conditions, and qualifications as set forth in this report, and
 
Data, reports, and other information supplied by Denison and other third party sources.
 
For the purpose of this report, RPA has relied on ownership information provided by Denison. RPA has not researched property title or mineral rights for the Wheeler River Project and expresses no opinion as to the ownership status of the property.
 
If applicable: RPA has relied on Denison for guidance on applicable taxes, royalties, and other government levies or interests, applicable to revenue or income from the project.
 
Except for the purposes legislated under provincial securities laws, any use of this report by any third party is at that party’s sole risk.
 
 
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4
Property Description and Location
 
 
4.1
Property Location
 
The Wheeler River property, comprising the Phoenix and Gryphon uranium deposits, is located in the eastern Athabasca Basin, approximately 600 km north of Saskatoon, 260 km north of La Ronge, and 110 km southwest of Points North Landing, in northern Saskatchewan (Figure 4-1). The centre of the property is located approximately 35 km northeast of the Key Lake mill and 35 km southwest of the McArthur River mine, which are operated by Cameco. The property straddles the boundaries of NTS map sheets 74H-5, 6, 11, and 12. The UTM coordinates of the approximate centre of the property are 475,000E and 6,370,000N (NAD83, Zone 13N).
 
The Gryphon deposit is located approximately three kilometres northwest of the Phoenix deposit. The Phoenix deposit was discovered in 2008 and the Gryphon deposit was discovered in 2014. Prior to this report the estimated mineral resources contained in each deposit was last updated in the 2015 RPA technical report (RPA, 2015). The Phoenix deposit is located at the unconformity between the Athabasca Basin and basement rocks, approximately 400 m below surface, whereas the Gryphon deposit is located predominantly in the basement rocks below the unconformity surface.
 
4.2
Land Tenure
 
The property comprises 19 contiguous claims totalling 11,720 ha, with an annual requirement of CAD$293,000 in either work or cash to maintain title to the mineral claims, are held as a joint venture among Denison (63.3%), Cameco (26.7%), and JCU (10%) with no back-in rights or royalties that need to be paid. Based on previous work submitted and approved by the province of Saskatchewan, title is secure until 2035. The claims are shown in Figure 4-2 and listed in Table 4-1. Denison has been the operator of the property since November 10, 2004.
 
 
Table 4-1: Land Tenure Details
 
Disposition #
Area
(ha)
Annual Assessment
($)
Excess Credit
($)
Years
Protected
S-97677
322
$8,050
$136,850
17
S-97678
335
$8,375
$142,375
17
S-97690
1,087
$27,175
$461,975
17
S-97894
246
$6,150
$104,550
17
S-97895
314
$7,850
$133,450
17
S-97896
356
$8,900
$151,300
17
S-97897
524
$13,100
$222,700
17
S-97907
352
$8,800
$149,600
17
S-97908
1,619
$40,475
$688,075
17
S-97909
1,036
$25,900
$440,300
17
S-98339
362
$9,050
$153,850
17
S-98340
250
$6,250
$106,250
17
S-98341
802
$20,050
$340,850
17
S-98342
1,016
$25,400
$431,800
17
S-98343
362
$9,050
$153,850
17
S-98347
939
$23,475
$399,075
17
S-98348
951
$23,775
$404,175
17
S-98349
540
$13,500
$229,500
17
S-98350
307
$7,675
$130,475
17
 
11,720
 
 
 
 

 
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4.3
Mineral Rights
 
In Canada, natural resources fall under provincial jurisdiction. In the Province of Saskatchewan, the management of mineral resources and the granting of exploration and mining rights for mineral substances and their use are regulated by the Crown Minerals Act and The Mineral Tenure Registry Regulations, 2012, that are administered by the Saskatchewan Ministry of the Economy. Mineral rights are owned by the Crown and are distinct from surface rights.
 
In Saskatchewan, a mineral claim does not grant the holder the right to mine minerals. A Saskatchewan mineral claim in good standing can be converted to a lease upon application. Leases have a term of 10 years and are renewable. A lease proffers the holder with the exclusive right to explore for, mine, work, recover, procure, remove, carry away, and dispose of any Crown minerals within the lease lands which are nonetheless owned by the Province. Surface facilities and mine workings are therefore located on Provincial lands and the right to use and occupy lands is acquired under a surface lease from the Province of Saskatchewan. A surface lease carries a maximum term of 33 years, and may be extended as necessary, to allow the lessee to develop and operate the mine and plant and thereafter to carry out the reclamation of the lands involved.
 
4.4
Royalties and other Encumbrances
 
The property is subject to royalties levied by the Province of Saskatchewan (refer to Section 22.2). RPA is not aware of any other royalties due, back-in rights, or other encumbrances by virtue of any underlying agreements.
 
4.5
Permitting
 
RPA is not aware of any environmental liabilities associated with the property.
 
RPA understands that Denison has all the required permits to conduct the proposed work on the property. RPA is not aware of any other significant factors and risks that may affect access, title, or the right or ability to perform the proposed work program on the property.
 
 
 
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Figure 4-1: Wheeler River Project Location Map
 
 
 
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Figure 4-2: Wheeler River Property Map
 
 
 
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5
Accessibility, Climate, Local Resources, Infrastructure, and Physiography
 
 
5.1
Accessibility
 
Access to the property and deposits is by road, helicopter, or fixed wing aircraft from Saskatoon. Vehicle access to the property is by Highway 914, which terminates at the Key Lake mill. The ore haul road between the Key Lake and McArthur River operations lies within the eastern part of the property. An older access road, the Fox Lake Road, between Key Lake and McArthur River provides access to most of the northwestern side of the property. Gravel and sand roads and drill trails provide access by either four-wheel-drive or all-terrain vehicles to the rest of the property.
 
5.2
Climate
 
The climate is typical of the continental sub-arctic region of northern Saskatchewan, with temperatures ranging from +32°C in summer to -45°C in winter. Winters are long and cold, with mean monthly temperatures below freezing for seven months of the year. Winter snow pack averages 70 cm to 90 cm. Field operations are possible year round with the exception of limitations imposed by lakes and swamps and the periods of break-up and freeze-up.
 
Freezing of surrounding lakes, in most years, begins in November and break-up occurs around the middle of May. The average frost-free period is approximately 90 days.
 
Average annual total precipitation for the region is approximately 450 mm, of which 70% falls as rain, with more than half occurring from June to September. Snow may occur in all months but rarely falls in July or August. The prevailing annual wind direction is from the west with a mean speed of 12 km/hr.
 
5.3
Local Resources and Infrastructure
 
La Ronge is the nearest commercial/urban centre where most exploration supplies and services can be obtained. Two airlines offer daily, scheduled flight services between Saskatoon and La Ronge (located approximately 600 km and 260 km respectively, south of the property). Most company employees are on a two weeks in and two weeks off schedule. Contractor employees are generally on a longer work schedule.
 
As noted previously, the property is well located with respect to all weather roads and the provincial power grid. Most significantly, the operating Key Lake mill complex, owned and operated by Cameco, is approximately 35 km south of the property.
 
Field operations are currently conducted from Denison’s Wheeler River camp, 4 km south of Gryphon and three kilometres southwest of Phoenix (Figure 4-2). The camp, which is operated by Denison, provides accommodations for up to 40 exploration personnel. Fuel and miscellaneous supplies are stored in existing warehouse and tank facilities at the camp. The site generates its own power. Abundant water is available from the numerous lakes and rivers in the area.
 
 
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5.4
Physiography
 
The property is characterized by a relatively flat till plain with elevations ranging from 477 m to 490 MASL. Throughout the area, there is a distinctive northeasterly trend to landforms resulting from the passage of Pleistocene glacial ice from the northeast to the southwest. The topography and vegetation at the property are typical of the taiga forested land common to the Athabasca Basin area of northern Saskatchewan.
 
The area is covered with overburden from 0 m to 130 m in thickness. The terrain is gently rolling and characterized by forested sand and dunes. Vegetation is dominated by black spruce and jack pine, with occasional small stands of white birch occurring in more productive and well-drained areas. Lowlands are generally well drained but can contain some muskeg and poorly drained bog areas with vegetation varying from wet, open, non-treed vistas to variable density stands of primarily black spruce as well as tamarack depending on moisture and soil conditions. Lichen growth is common in this boreal landscape mostly associated with mature coniferous stands and bogs.
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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6
History
 
 
6.1
Prior Ownership
 
The Wheeler River property was staked on July 6, 1977, due to its proximity to the Key Lake uranium discoveries, and was vended into an agreement on December 28, 1978 among AGIP Canada Ltd. (“AGIP”), E&B Explorations Ltd. (“E&B”), and Saskatchewan Mining Development Corporation (“SMDC”), with each holding a one-third interest. On July 31, 1984, all parties divested a 13.3% interest and allowed Denison Mines Limited, a predecessor company to Denison, to earn a 40% interest. On December 1, 1986, E&B allowed PNC Exploration (Canada) Co. Ltd. (“PNC”) to earn a 10% interest from one-half of its 20% interest. In the early 1990s, AGIP sold its 20% interest to Cameco, which was a successor to SMDC. In 1996, Imperial Metals Corporation, a successor to E&B, sold an 8% interest to Cameco and a 2% interest to PNC. Participating interests in 2004 were Cameco 48%, JCU 12% (a successor to PNC), and Denison 40%.
 
In late 2004, Denison entered into an agreement to earn a further 20% interest by expending $7 million within six years. When the earn-in obligations were completed, the participating interests were Denison 60%, Cameco 30%, and JCU 10%. Since November 2004, Denison has been the operator of the WRJV.
 
In January 2017, Denison executed an agreement with the partners of the WRJV that will result in an increase in Denison's ownership of the Wheeler River project to up to approximately 66% by the end of 2018. Under the terms of the agreement, the JV Parties had agreed to allow for a one-time election by Cameco to fund 50% of its ordinary share of joint venture expenses in 2017 and 2018. The shortfall in Cameco's contribution are being funded by Denison, in exchange for a transfer of a portion of Cameco's interest in the project. Accordingly, Denison's share of joint venture expenses are 75% in 2017 and 2018, and Cameco and JCU's share of joint venture expenses will be 15% and 10%, respectively.
 
On January 31, 2018, Denison announced that it had increased its interest in the Wheeler River project, based on spending on the project during 2017, from 60% to 63.3% in accordance with this agreement.
 
6.2
Exploration and Development History
 
Excluding the years 1990 to 1994, exploration activities comprising airborne and ground geophysical surveys, geochemical surveys, prospecting and diamond drilling have been carried out on the Wheeler River property continuously from 1978 to the present.
 
Subsequent to the discovery of the Key Lake mine in 1975 and 1976, the Key Lake exploration model (Dahlkamp and Tan, 1977) has emphasized the spatial association between uranium deposition at, immediately above, or immediately below the unconformity with graphitic pelitic gneiss units in the basement subcrop under the basal Athabasca sandstone. The graphitic pelitic gneiss units are commonly intensely sheared and are highly conductive in contrast to the physically more competent adjoining rock types that include semipelitic gneiss, psammite, meta-arkose, or granitoid gneiss. From the late 1970s to the present, the Key Lake model has been useful in discovering blind uranium deposits throughout the Athabasca Basin (Jefferson et al., 2007), although it is worth noting that the vast majority of electromagnetic (“EM”) conductors are unmineralized.
 
Following the Key Lake exploration model, EM techniques were the early geophysical methods of choice for the Wheeler River property area during the period 1978 to 2004 and more than 152 line-km
 
 
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of EM conductors have been delineated on the property. These conductive units have been delineated to depths of 1,000 m, through the quartz-rich Athabasca Group sandstones that are effectively transparent from an EM perspective.
 
These conductors or conductor systems were assigned a unique designation and follow-up exploration drilling successfully identified several zones of uranium mineralization.
 
In 1982, AGIP discovered the MAW Zone. This alteration system contains rare earth element (“REE”) mineralization in a structurally disrupted zone which extends from the unconformity to the present surface. There is no evidence of uranium mineralization. The REE mineralization contains yttrium values greater than 2.0%, boron values up to 2.5%, and total rare earth oxide (“REO”) up to 8.1%.
 
In 1985, SMDC (predecessor to Cameco) drilled ZK-02 to test a moderate UTEM conductor axis in a previously unexplored area along the K-North conductor, which is now known as Gryphon. The drill hole intersected several zones of hydrothermal alteration in the sandstone indicating that the conductor was likely overshot and thus lay grid east of ZK-02.
 
In 1986, SMDC intersected uranium mineralization associated with Ni-Co-As sulphides at the unconformity in the M Zone (DDH ZM-10, 0.79% U3O8 over 5.75 m), and also discovered uranium mineralization at the O Zone, which is associated with a 72 m vertical unconformity offset. The O Zone basement-hosted mineralization graded 0.048% U3O8 over 0.9 m at 378.8 m in drill hole ZO-02.
 
In 1988, Cameco drilled ZK-04 and ZK-06 on the same drill section as ZK-02 to test for the UTEM conductor and follow up on the sandstone alteration. Hole ZK-04 was drilled 120 m grid east of ZK-02, and hole ZK-06 was drilled 35 m grid west of ZK-04. In drill hole ZK-04, a major basement fault structure was intersected from 572.6 m to 603.2 m, with associated strong hydrothermal alteration and a 9.8 m radioactive zone from 581.7 m to 591.5 m. Assays from drill hole ZK-04 returned 0.08% U3O8 over 2.4 m at 580.0 m and 0.19% U3O8 over 2.3 m at 587.7 m. Moderate to strong hydrothermal alteration and associated fault gouges and fracturing continued to the end of the hole at 631 m (approximately 112 m below the unconformity surface).
 
The third hole on this section, ZK-06, was drilled up-dip of ZK-04 in an attempt to locate the up-dip and unconformity extension of the mineralization intersected in drill hole ZK-04. Two significant zones of weak mineralization and elevated radioactivity were intersected within a 12.1 m zone, 11 m to 50 m below the unconformity. ZK-06 returned 0.17% U3O8 over 7.7 m at 532.0 m and 0.06% U3O8 over 4.4 m at 564.6 m. Intense alteration, fracturing and faulting in the sandstone was noted as well as alteration and structure extending approximately 50 m into the basement rocks. At this time, ZK-06 was thought to have intersected the unconformity target and no follow-up was conducted for several years.
 
From 1995 to 1997, exploration by Cameco identified strong alteration and illitic and dravitic geochemical enrichment associated with major structures in both the sandstone and the basement and a significant unconformity offset associated with the “quartzite ridge” which had been delineated as a result of drilling the Q conductor system.
 
In 1998, further drilling was carried out at the Q Zone and also at the R Zone (the Phoenix deposit area). At the R Zone, two drill holes were abandoned in sandstone due to quartz dissolution (desilicification). The possibility that this sandstone alteration might be of significance was not emphasized at the time.
 
In 1999, a geological setting similar to McArthur River’s P2 trend was intersected at the WC Zone, where faulted graphite-pyrite pelitic gneiss overlay the quartzite ridge. The former operator (Cameco) noted extensive dravite (boron) alteration in the overlying sandstones.
 
 
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In 2001, Cameco drilled ZK-23, testing the K1A SWML conductor approximately 250 m grid east of the ZK-02\ZK-04\ZK-06 drill fence in what is now the Gryphon area. The drill hole intersected a wide zone of structural disruption within the sandstone 40 m above the unconformity. The conductive response was explained by a wide zone of moderately graphitic-pyritic pelitic gneisses. No unconformity or basement mineralization was intersected and no follow-up drill holes were recommended.
 
In 2002, drill hole WR-185 intersected a 175 m unconformity offset along the west contact of the quartzite ridge. This area was the initial focus of the WRJV after Denison became operator in 2004.
 
In 2003, 61 shallow reverse circulation (RC) holes were drilled, targeting the sandstone/overburden interface exploring for alteration zones in the upper sandstone. No anomalies were detected. Drill hole WR-190A tested the WS UTEM conductor and was abandoned at 364 m due to deteriorating drilling conditions. This drill hole is located only 90 m from the eventual Phoenix discovery drill hole WR-249. Noticeable desilicification and bleaching of the sandstone were present, but no noteworthy geochemical anomalies were identified. A direct current (DC) resistivity survey was also completed to map trends of alteration within the Athabasca sandstones and underlying basement rocks that might be related to uranium mineralization.
 
In November 2004, Denison became operator of the WRJV and in 2005 carried out property-wide airborne Fugro GEOTEM EM and Falcon gravity surveys with five subsequent ground transient EM (“TEM”) grids completed on GEOTEM anomalies. The focus for Denison, based on a McArthur River analogy, was the quartzite ridge, particularly the west, or footwall side of the ridge. Several small regional campaigns were carried out to test EM conductors located by airborne and ground geophysical surveys.
 
In 2007, a 154.8 line-km geophysical induced polarization (“IP”) and magnetotelluric (“MT”) survey using Titan 24 DC resistivity technology was undertaken with the prime goals being the extension of Cameco’s 2003 resistivity survey, surveying of the K and M zones and exploration of the REA or “Millennium” (WS) Zone, which appeared to have attractive geological features in an underexplored part of the property. The results showed the following:
 
A very strong resistivity high which delineated the quartzite unit.
Two strong, well defined resistivity lows both occurring in areas where previous drill holes had been lost in the Athabasca sandstone.
Well defined resistivity chimneys.
 
Although 2007 drilling on various 2003 resistivity anomalies did not discover any significant uranium mineralization, there was some support for the concept that resistivity did “map” alteration chimneys within the Athabasca sandstone. Alteration chimneys in the Athabasca sandstone above the unconformity or basement-hosted uranium mineralization have been described from almost all Athabasca Basin uranium deposits, following the first thorough description of their occurrence at the McClean deposits (Saracoglu et al. 1983; Wallis et al. 1984). The chimneys nearly always have a prominent structural component consisting of broken and rotated sandstone and a high degree of fracturing and brecciation. These structural features are accompanied by alteration consisting of variable amounts of bleaching (removal of diagenetic hematite), silicification, desilification, druzy quartz-lined fractures, secondary hematite, dravite, and/or clay minerals which can cause resistivity anomalies.
 
During the winter and spring of 2008, the North Grid resistivity survey data was reinterpreted and three drill targets, A, B, and C, were proposed. These targets were well defined alteration or resistivity chimneys situated close to the hanging wall of the quartzite unit in areas where previous attempts to
 
 
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drill ground EM conductors (the WS and the REA) had failed to reach the unconformity. In 2008, drill hole WR-249 led to the discovery of the Phoenix deposit. Subsequent drilling identified four mineralized zones over a strike length of more than one kilometre: Phoenix zones A, B, C, and D.
 
In March 2014, drill hole WR-556 resulted in discovery of the Gryphon deposit, intersecting uranium mineralization averaging 15.33% U3O8 over 4.0 m in basement graphitic gneiss, 200 m below the sub-Athabasca unconformity. Since the discovery of the Phoenix deposit in 2008, exploration efforts have been focused on the K-Zone trend which exhibits numerous favourable exploration criteria including basement quartzite and graphitic gneisses, basement structures, reverse offsets of the unconformity, weak basement hosted mineralization near the unconformity, and anomalous sandstone geochemistry and alteration. Historical holes ZK-04 and ZK-06 drilled in the late 1980s, targeting unconformity-related mineralization, intersected favourable sandstone structure and alteration as well as alteration and weak mineralization in the basement approximately 35 m below the unconformity. Follow-up drilling campaigns attempted to locate unconformity mineralization up dip of the weak basement mineralization. Gryphon deposit discovery drill hole WR-556 was the first to evaluate the down dip projection of these intersections.
 
Subsequent drilling on the property from 2014 to present has focused on delineating the extent and continuity of the Gryphon deposit as well as evaluating additional high priority areas along the K-North trend.
 
Table 6-1 is a summary of the exploration activities that have been carried out on the Wheeler River property.
 
 
Table 6-1: Exploration and Development History
 
Period (Year)
Activity
1978-Present
The area was previously explored by AGIP and SMDC (Cameco). Since 1978, several airborne and ground geophysical surveys have defined 152 km of conductor strike length in fourteen conductive zones.
1986-1988
AGIP, SMDC, and Cameco drilled a total of 192 drill holes encountering sub-economic uranium mineralization in the M Zone (1986), O Zone (1986), and K-Zone (1988). Rare earth element mineralization was also discovered in the MAW Zone (1982).
2004
Denison assumed operatorship in 2004 and initially focused on the footwall side of the quartzite ridge (west side of the property) intersecting sub-economic uranium mineralization.
2008
In 2008, three resistivity targets were drilled leading to the discovery of the Phoenix deposit.
2008-2014
During the period 2008 to 2014, drilling predominantly focused on defining the Phoenix deposits.
2014-Present
Subsequent drilling has discovered and delineated the Gryphon deposit
 
 
6.3
Previous Mineral Resource Estimates
 
An initial mineral resource estimate was reported for the Phoenix deposit in a NI 43-101 technical report by SRK dated November 17, 2010 (Table 6-2). An updated mineral resource estimate for the Phoenix deposit Zones A and B was prepared by RPA on December 31, 2012 (Table 6-3). A further updated mineral resource estimate for the Phoenix deposit Zones A and B was prepared by RPA on May 28, 2014 by RPA (Table 6-4) and an initial mineral resource estimate for the Gryphon deposit was prepared by RPA on September 25, 2015 (Table 6-5). All previous mineral resource estimates are superseded by the updated mineral resource estimate in the current Wheeler River technical report, which incorporates additional drilling completed at Gryphon since 2015.
 
 
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Table 6-2: SRK Mineral Resource Estimate as of November 17, 2010 (100% Basis) Denison Mines Corp. – Phoenix Deposit
 
Deposit
Classification
Tonnes
(000)
Lbs U3O8
(000)
Average Grade
(%U3O8)
Zone A
Indicated
89.9
35,638
18.0
Zone B
Inferred
23.8
3,811
7.3
*    Source: Arseneau and Revering, 2010
 
 
 
 
Table 6-3: RPA Mineral Resource Estimate as of December 31, 2012 (100% Basis) Denison Mines Corp. – Phoenix Deposit
 
Category
Tonnes
Grade
(% U3O8)
Million lb U3O8
Indicated
152,400
15.6
52.3
Inferred
11,600
29.8
7.6
*            Source: Roscoe, 2012
 
 
Table 6-4: RPA Mineral Resource Estimate as of May 28, 2014 (100% Basis) Denison Mines Corp. – Phoenix Deposit
 
 
Category
Tonnes
Grade
(% U3O8)
Million lb U3O8
Indicated
166,400
19.13
70.2
Inferred
8,600
5.80
1.1
*            Source: Roscoe, 2014
 
 
Table 6-5: RPA Mineral Resource Estimate as of September 25, 2015 (100% Basis) Denison Mines Corp. – Phoenix Deposit and Gryphon Deposits
 
 
Deposit
Classification
Tonnes
 
Million lb U3O8
 
 
Average Grade
(%U3O8)
Phoenix
Indicated
166,400
70.2
 
19.14
Phoenix
Inferred
8,600
1.1
 
5.80
Gryphon
Inferred
834,000
44.1
 
2.31
*    Source: Roscoe, 2015
 
 
 
The current report includes the Phoenix mineral resource estimate documented in the RPA 2015 technical report as well as the updated mineral resource estimate for the Gryphon deposit.
 
6.4
Past Production
 
To date, no production has occurred on the property and the property is still at the advanced exploration stage.
 
 
 
 
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7
Geological Setting and Mineralization
 
 
RPA notes that portions of the following geological descriptions are taken from internal Denison reports of 2009 to 2017.
 
7.1
Regional Geology
 
7.1.1
General
 
The Phoenix and Gryphon uranium deposits are located near the southeastern margin of the Athabasca Basin in the southwest part of the Churchill Structural Province of the Canadian Shield (Figure 7-1). The Athabasca Basin is a broad, closed, and elliptically shaped, cratonic basin with an area of 425 km (east-west) by 225 km (north-south). The bedrock geology of the area consists of Archean and Paleoproterozoic gneisses unconformably overlain by up to 1,500 m of flat-lying, unmetamorphosed sandstones and conglomerates of the mid-Proterozoic Athabasca Group. The property is located near the transition zone between two prominent litho-structural domains within the Precambrian basement, the Mudjatik Domain to the west and the Wollaston Domain to the east.
 
The Mudjatik Domain is characterized by elliptical domes of Archean granitoid orthogenesis separated by keels of metavolcanic and metasedimentary rocks, whereas the Wollaston Domain is characterized by tight to isoclinal, north-easterly trending, doubly plunging folds developed in Paleoproterozoic metasedimentary rocks of the Wollaston Supergroup (Yeo and Delaney, 2007), which overlie Archean granitoid orthogenesis identical to those of the Mudjatik Domain.
 
The area is cut by a major northeast-striking fault system of Hudsonian Age. The faults occur predominantly in the basement rocks but often extend up into the Athabasca Group due to several periods of post-depositional movement. Diabase sills and dikes up to 100 m in width and frequently associated with the faulting have intruded into both the Athabasca rocks and the underlying basement.
 
7.1.2
The Metamorphosed Basement
 
The basement rocks underlying the Athabasca Group have been divided into three tectonic domains: the Western Craton, the Cree Lake Mobile Zone, and the Rottenstone Complex (Figure 7-1 and Figure 7-2). The central Cree Lake Mobile Zone is bounded in the northwest by the Virgin River Shear and Black Lake fault and in the southeast by the Needle Falls Shear Zone.
 
The Cree Lake Mobile Zone has been further subdivided into the Mudjatik Domain in the west half and the Wollaston Domain in the east half. The lithostructural character of these domains is the result of the Hudsonian Orogeny in which an intense thermo-tectonic period remobilized the Archean age rocks and led to intensive folding of the overlying Aphebian-age supracrustal metasedimentary units. The Mudjatik Domain represents the orogenic core and comprises non-linear, felsic, granitoid to gneissic rocks surrounded by subordinate thin gneissic supracrustal units. These rocks, which have reached granulite-facies metamorphic grades, usually occur as broad domal features. The adjacent Wollaston Domain consists of Archean granitoid gneisses overlain by an assemblage of Aphebian pelitic, semipelitic, and arkosic gneisses, with minor interlayered calc-silicate rocks and quartzites. These rocks are overlain by an upper assemblage of semipelitic and arkosic gneisses with magnetite bearing units.
 
 
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The Wollaston Domain basement rocks are unconformably overlain by flat lying, unmetamorphosed sandstones, and conglomerates of the Helikian age Athabasca Group, which is a major aquifer in the area.
 
7.1.3
The Athabasca Group
 
The Athabasca Group sediments consist of unmetamorphosed pink to maroon quartz-rich pebbly conglomerate and red siltstone of the Read Formation and maroon quartz-pebble conglomerate, maroon to white pebbly sandstone, sandstone and clay-clast-bearing sandstone belonging to the Manitou Falls Formation. The sandstone is poorly sorted near the base, where conglomerates form discontinuous layers of variable thickness. Minor shale and siltstone occur in the upper half of the succession. Locally, the rocks may be silicified and indurated or partly altered to clay and softened. In spite of their simple composition, their diagenetic history is complex (Jefferson et al., 2007). The predominant regional background clay is dickite.
 
 
 
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Figure 7-1: Regional Geology and Uranium Deposits
 
 
 
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Figure 7-2: Simplified Geological Map of Athabasca Basin
 
 
 
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The basin is interpreted to have developed from a series of early northeast-trending fault-bounded sub-basins that coalesced. The topographic profile of the unconformity suggests a gentle inward slope in the east, moderate to steep slopes in the north and south, and a steeper slope in the west.
 
Subdivisions of the Athabasca Group in the eastern part of the basin (Figure 7-2) include four members from bottom to top:
 
Read Formation (formerly the MFa Member) - a sequence of poorly sorted sandstone and minor conglomerate
Bird Member (MFb) - interbedded sandstone and conglomerate distinguished from the underlying MFa and overlying MFc by the presence of at least 1% to 2% conglomerate in beds thicker than 2 cm
Collins Member (MFc) - a sandstone with rare clay intraclasts
Dunlop Member (MFd) - a fine-grained sandstone with abundant (>1%) clay intraclasts
 
7.2
Quaternary Deposits
 
In the eastern Athabasca Basin, Quaternary glacial deposits up to 100 m thick drape bedrock topography of ridges, typically associated with granitic gneiss domes, and structurally controlled valleys (Campbell, 2007). At least three tills, locally separated by stratified gravel, sand, and silt, can be distinguished. The dominant ice-flow direction was southwesterly, but a late glacial re-advance was southerly in eastern parts of the basin and westerly along its northern edge.
 
7.3
Local and Property Geology
 
7.3.1
General
 
The Wheeler River property lies in the eastern part of the Athabasca Basin where undeformed, late Paleoproterozoic to Mesoproterozoic sandstone, conglomerate, and mudstone of the Athabasca Group unconformably overlie early Paleoproterozoic and Archean crystalline basement rocks, as described below. The local geology of the property is very much consistent with the regional geology described above.
 
7.3.2
Quaternary Deposits
 
The property is partially covered by lakes and muskeg, which overlie a complex succession of glacial deposits up to 130 m in thickness. These include eskers and outwash sand plains, well-developed drumlins, till plains, and glaciofluvial plain deposits (Campbell, 2007). The orientation of the drumlins reflects southwesterly ice flow.
 
7.3.3
Athabasca Group
 
Little-deformed late Paleoproterozoic to Mesoproterozoic Athabasca Group strata comprised of Manitou Falls Formation sandstones and conglomerates unconformably overlie the crystalline basement and have a considerable range (Figure 7-3) from 170 m over the quartzite ridge to at least 560 m on the western side of the property.
 
The Manitou Falls Formation is locally separated from the underlying Read Formation (formerly the MFa) by a paraconformity, and comprises three units, the Bird Member (MFb), Collins Member (MFc), and Dunlop Member (MFd), which are differentiated based on conglomerates and clay intraclasts (Bosman and Korness, 2007; Ramaekers et al., 2007). Thickness of the Read Formation
 
 
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ranges from zero metres at the north end of the property and over parts of the quartzite ridge to 200 m west of the quartzite ridge. The thickness of the MFb, which is absent above the quartzite ridge, is as much as 210 m in the northeastern part of the property. The MFc unit is a relatively clean sandstone with locally scattered granules or pebbles and one-pebble-thick conglomerate layers interpreted to be pebble lag deposits. The MFc ranges in thickness from 30 m to 150 m. The MFd is distinguished from the underlying MFc sandstone by the presence of at least 0.6% clay intraclasts (Bosman and Korness, 2007). The MFd is up to 140 m thick. The upper 100 m to 140 m of sandstone is typically buff coloured, medium to coarse grained, quartz rich and cemented by silica, kaolinite, illite, sericite, or hematite. Alteration of the sandstone is noted along much of the Phoenix deposit trend.
 
Variations in thickness of the Athabasca sub-units reflect syndepositional subsidence. In particular, the thinning of the Read Formation towards the quartzite ridge, and the absence of both the Read and the MFb Member over much of the ridge, indicate syn-Read uplift of the latter along the thrust fault that bounds it to the west. This is supported by the Read Formation sedimentary breccia, interpreted as a fault-scarp talus deposit, along the western margin of the ridge.
 
Although the predominant regional background clay in the Athabasca Basin is dickite, the property lies within a broad illite anomaly trending north-easterly from Key Lake through the McArthur River area (Earle and Sopuck, 1989). Chlorite and dravite are also relatively common in sandstones within this zone.
 
The topography of the sub-Athabasca basement varies dramatically across the property. From elevations of 160 MASL to 230 MASL along its southeastern edge, the unconformity rises gently to a pronounced north-easterly trending ridge up to 350 MASL, coincident with the subcrop of a quartzite unit in the crystalline basement. The unconformity surface drops steeply westward to as low as 30 m below sea level. The unconformity surface is less variable in the northern part of the property, ranging from 40 MASL in the northeast to 200 MASL in the northwest.
 
The west side of the quartzite unit forms a prominent topographic scarp, rising up to 200 m above the sub-Athabasca unconformity lying to the west. The breccia of angular quartzite blocks, centimetres to metres in size, with a finely laminated sandstone matrix, has been intersected in numerous drill holes along the western margin (footwall) of the quartzite ridge. The quartzite breccia is often intimately associated with uranium mineralization that occurs at numerous locations along the footwall of the quartzite unit.
 
The Athabasca sandstones were deposited as a succession of sandy and gravelly braided river deposits in westward-flowing streams. The conglomerates typical of MFb indicate increased stream competence, due either to increased flow (i.e., higher precipitation) or increased subsidence. The mud chips typical of MFd are fragments of thin mud beds deposited from suspension during the late stages of a flood and re-worked by the next one. Hence, they indicate intermittent, possibly seasonal, stream flow (Liu et al., 2011).
 
 
 
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Figure 7-3: Cross Section of Wheeler River Athabasca and Basement Rock Types
 
 
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7.3.4
Basement Geology
 
Basement rocks beneath the Phoenix and Gryphon deposits are part of the Wollaston Domain and are comprised of metasedimentary and granitoid gneisses (Figure 7-4). The metasedimentary rocks belong to the Wollaston Supergroup and include graphitic and non-graphitic pelitic and semipelitic gneisses, meta-quartzite, and rare calc-silicate rocks together with felsic and quartz feldspathic granitoid gneisses. These metasedimentary rocks are interpreted to belong to the Daly Lake Group (Yeo and Delaney, 2007). Pegmatitic segregations and intrusions are common in all units with garnet, cordierite, and sillimanite occurring in the pelitic strata, indicating an upper amphibolite grade of metamorphism.
 
Graphitic pelitic gneiss and quartzite units appear to play important roles in the genesis of Athabasca Basin unconformity-type deposits (Jefferson et al., 2007). Thus the presence of extensive subcrop of both units: 18 km of quartzite and 152 line-km of conductors (assumed to be graphitic pelitic gneiss), greatly enhances the economic potential of the Wheeler River property.
 
All of these rock types have a low magnetic susceptibility. The metasedimentary rocks are flanked by and intercalated with granitoid gneisses, some of which have a relatively high magnetic susceptibility. Some of these granitoid gneisses are Archean (Card et al., 2007). Prior to extensive drilling, interpretation of basement geology depends heavily on airborne magnetic data combined with airborne and ground EM interpretation.
 
A “Paleoweathered Zone”, generally from 3 m to 10 m thick, is superimposed on the crystalline rocks and occurs immediately below the unconformity.
 
 
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Figure 7-4: Wheeler River Property Basement Geology
 
 
 
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7.3.5
Phoenix Deposit
 
The quartzite ridge, an interpreted impermeable and structural barrier forming the footwall to the mineralization, dominates the basement geology at the Phoenix deposit. The quartzite unit exhibits variable dips from -45º to -75º to the southeast, averaging -50º, and with an undulating, but generally 055º azimuth. Immediately overlying the quartzite is a garnetiferous pelitic gneiss, which varies from seven metres to 60 m in thickness. This generally competent and unmineralized unit contains distinctive porphyroblastic garnets and acts as a marker horizon. Overlying the garnetiferous pelitic gneiss is a graphitic pelitic gneiss in which the graphite content varies from 1% to 40%. The graphitic pelitic gneiss is approximately 5 m wide in the southwest, increases to approximately 70 m near drill hole WR-249, and is 50 m wide at the northeast extremity. Overlying the graphitic pelitic gneiss is a massive, non-graphitic, unaltered pelitic gneiss unit.
 
Mineralization at Phoenix generally occurs at the Athabasca unconformity with basement rocks at depths ranging from 390 m to 420 m. It is interpreted to be structurally controlled by the northeast-southwest trending (055º azimuth) WS Fault which dips -55º to the southeast on the east side of the quartzite ridge (Figure 7-5).
 
7.3.6
Gryphon Deposit
 
The geology of the Gryphon deposit comprises highly deformed crystalline basement rocks overlain by the relatively undeformed Athabasca sandstone. There are four main sandstone members of the Manitou Falls (“MF”) Formation present (from youngest to oldest): MFd, MFc, MFb, and the Read Formation. At the Gryphon deposit, the thickness of the Athabasca sandstone cover ranges from 480 m in the southeast to 540 m in the northwest. The unconformity surface down-drops in a series of steps to the northwest. There is approximately 60 m of vertical displacement over 250 m across strike.
 
Four major basement lithological units have been defined at Gryphon which dip moderately to the southeast (Figure 7-6):
 
1.
Upper Graphite - The Upper Graphite is approximately 110 m thick, occurs furthest stratigraphically to the southeast, and is located hanging wall to the mineralization. The A and E series of mineralized lenses occur at the base of the unit along a major fault zone, the G-Fault. This pelitic gneiss unit averages 5% to 8% graphite in the upper portion of the unit grading to 10% to 15% in the lower portion of the unit. The unit is well foliated and strikes at 022° dipping at 50° to the southeast.
 
2.
Quartz-Pegmatite Assemblage – Stratigraphically below the Upper Graphite is the Quartz-Pegmatite Assemblage, interpreted to be zone of silicification either pre- or syn-mineralization. This unit is approximately 55 m thick and consists of several smaller (five metre to nine metre) discrete sub-units of alternating quartzite, quartz-rich pegmatite, pegmatite, and graphite-bearing pelitic gneisses. The unit hosts the B series of mineralized lenses which occur along foliation-parallel faults related to the G-Fault.
 
3.
Lower Graphite - Underlying the Quartz-Pegmatite Assemblage is the Lower Graphite. This pelitic gneiss unit is approximately 15 m thick and averages 10% to 15% graphite. It is well foliated and strikes approximately 022° and dips 45° to the southeast, and is host to the C series of mineralized lenses which are interpreted to occur along foliation-parallel faults related to the G-Fault or within tensional fractures.
 
 
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4.
Basal Pegmatite – Stratigraphically below the Lower Graphite is the Basal Pegmatite. This is a pegmatite to coarse grained granitic unit which is competent and relatively unaltered. Within the Basal Pegmatite, there are multiple minor (1 m to 2m) variably-graphitic pelitic gneiss intervals. The pelitic gneiss intervals pinch and swell along strike and no not maintain a continuous thickness throughout the deposit area. The D series of mineralized lenses occurs within this unit within tensional fractures within the pegmatites/granites or concordant with the variably-graphitic pelitic gneisses.
 
 
Denison Mines Corp.                 Technical Report with an Updated Mineral Resource Estimate for the Wheeler River Property
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Figure 7-5: WS Reverse Fault and the Phoenix Deposit
 
 
 
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Figure 7-6: Gryphon Representative Cross-section.
 
 
 
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7.4
Alteration
 
7.4.1
Phoenix Deposit
 
At Phoenix, typical unconformity-associated alteration is evident, with a form and nature similar to other Athabasca Basin unconformity-associated deposits. The sandstones are altered for as much as 250 m above the unconformity and exhibit varying degrees of silicification and desilicification (which causes many technical drilling problems), as well as dravitization, kaolinitization, chloritization, and illitization. In addition, hydrothermal hematite and druzy quartz are present in the sandstone and commonly in the basement rocks. Alteration is focussed along structures propagating upward from the WS shear and associated splays, and probably does not exceed 100 m width across strike, making this a relatively narrow exploration target. The basement in the northeast part of the Phoenix deposit is much more extensively bleached and clay altered than that to the southwest.
 
Sandstone alteration is typically much stronger and widely distributed above Zone D and Zone A associated with a reduced environment indicated by the strong presence of sooty pyrite. Alteration diminishes in intensity along strike to the southwest. Sandstone alteration above Zone B and Zone C, in general, is half the amplitude and intensity of Zone A with a less pronounced damage zone above the unconformity. Zone B and Zone C also exhibit a pronounced oxidized environment as indicated by the strong presence of hydrothermal hematite primarily overprinting the basement sequence directly underlying the unconformity.
 
7.4.2
Gryphon Deposit
 
At Gryphon, alteration in the Athabasca sandstone is quite variable relative to the basement-hosted mineralization. Directly above Gryphon, the typical alteration sequence above the unconformity (from surface to the unconformity) is described as follows:
 
The upper 100 m to 150 m of sandstone is typically weakly bleached and silicified (interpreted as a regional feature)
From approximately 150 m to 440 m from surface, there is no significant alteration. Diagenetic hematite banding is predominant.
From approximately 440 m to 540 m from surface, variable amounts of alteration occur, which include:
 
Moderate bleaching, irregular bands of hydrothermal hematite, and patchy silicification from 490 m to 540 m
 
Pervasive silicification and strong dravitic interstitial clays from 515 m to 540 m
 
Alternating silicification and desilicification with strong grey alteration, pyrite development, and dravite rich breccias from 440 m to 540 m.
 
Sandstone alteration is generally lacking in the hanging wall (southeast) to the Gryphon mineralization and exhibits a background dickitic signature, although drill holes that intersected an up-faulted basement exhibit moderate silicification with preserved diagenetic hematite.
 
Sandstone alteration in the footwall (northwest) to the Gryphon mineralization consists of isolated alteration zones with strong bleaching, grey alteration, silicification, and vuggy quartz that occur upwards of 60 m above the unconformity. Footwall sandstone is also dominated by a strong kaolinitic signature with moderate amounts of dravite, primarily controlled by basement structural splays propagating into the sandstone. Although sandstone alteration in the footwall area of the Gryphon deposit exhibits strong visual and clay alteration its geochemical signature is much less pronounced with sandstone uranium partial values seldom exceeding 1 ppm. These isolated zones of alteration are assumed to be related to the up-dip projection of the offsetting basement reverse faults to the southeast,
 
 
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notably the G-Fault itself and associated hanging wall splays. The Gryphon E series of mineralized lenses occurs at the intersection of the G-Fault and the unconformity and directly underlies the structurally disrupted zone of sandstone alteration.
 
Directly below the unconformity and distal to basement structures, the typical paleoweathering profile is preserved. The basement paleoweathering profile is gradually overprinted by various forms and intensities of hydrothermal alteration proximal to the various structures associated with Gryphon.
 
Basement clay alteration exhibits a zoned sequence around mineralization associated with the various mapped structures and varies in intensity in relation to each series of mineralized lenses and the host lithology. Notably stronger and widely distributed alteration sequences are present around the A and B series lenses with less intense and pronounced alteration noted in the vicinity of the C, D and E series lenses. There is no direct correlation between intensity of alteration and uranium grade.
 
Distal alteration associated with Gryphon mineralization includes weak chlorite and sericite. A distinct halo of phengite is also present hangingwall to the G-Fault and footwall to the Basal Fault, essentially indicating an oxidized and relatively weak to unaltered envelope surrounding the Gryphon mineralizing system.
 
Proximal alteration signatures associated with the Gryphon series of lenses include various amounts of weak to strong bleaching, dravite and druzy quartz formation. There is a distinct zonation of cordierites with progressively stronger alteration proximal to mineralization. Distal to mineralization cordierites are weakly altered and exhibit a characteristic blue-green phengitic illite-chlorite clay partly replacing the cordierite itself. Proximal to mineralization the cordierites are replaced by a brown muscovitic illite and weak chlorite pseudomorphs which are generally stretched and elongated along foliation. A distinct halo of paragonite surround the mineralization proximal to the G-Fault and Basal Faults, being indicative of a reducing environment. Quartz flooding and silicification is quite common proximal to high grade mineralization. Intense pervasive silicification, which variably is destructive to basement rock textures, occurs within two to ten metres of mineralization and has a close spatial associated with the G-Fault and Basal Fault. Silicification is locally associated with pink silica and pink sericite which is interpreted to be a product of active beta decay, which produces visible spectral absorptions and changes in refractive index. Clay-sericite also exhibits a distinct zonation around mineralization at Gryphon. Distal to mineralization green sudoite generally replace subhedral feldspars. Medial to mineralization feldspars are replaced by a ‘whispy’ paragonitic white sericite grading to an intense pervasive white dravite-illite-kaolinite alteration proximal to mineralization. The latter is especially prominent along the Basal Fault in proximity to the D series mineralized lenses.
 
7.5
Structural Geology
 
The Wheeler River property lies in the Wollaston Domain, a northeast trending fold and thrust belt with recumbently folded, early Paleoproterozoic, Wollaston Supergroup metasedimentary rocks intercalated with granitoid gneisses, some of which are of Archean age.
 
Numerous hypothetical structural models have been proposed for the property. The simplest model infers a southeast dipping homocline. The presence of mechanically competent quartzite units, as well as the bounding units of competent granitoid gneiss, together with the many kilometres of relatively incompetent graphitic pelitic gneiss provides a situation for the extensive development of thrust and strike slip/wrench fault tectonics, as well as later normal faults, at competent/incompetent interfaces (Liu et al., 2011). A northwesterly trending diabase dyke, probably part of the 1.27 Ga Mackenzie dyke swarm, cuts across the sandstones on the northern part of the property.
 
 
 
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7.5.1
Phoenix Deposit
 
The major structural feature at the Phoenix deposit is the northeast-southwest trending (055º azimuth) WS reverse fault which dips -55º to the southeast and lies within or at the base of the graphitic pelitic gneiss unit along the east edge (hanging wall) of the quartzite ridge, which appears to have acted as a buttress for thrusting and reverse faulting (Kerr, 2010; Kerr et al., 2011). Deformation within the WS Fault has occurred partly by ductile shearing, but mainly by fracturing. A progressive sequence of fracturing is evident by variations in the strike and dip of slickensides. The principal stress directions responsible for early deformation were northwest-southeast. A change in the principal stress to an east-west direction led to later strike-slip movement along the WS shear. Later extension is indicated by northwest-striking normal faults, which dip steeply to the southwest.
 
With the limited structural data currently available (as the majority of drillholes were vertical), it appears that the WS structure was most active during deposition of the Read Formation, however, continued uplift is indicated by westward tilting of MFc strata along the fault zone. Reverse fault displacements on the western edge of the quartzite ridge occurred primarily within the highly resistant quartzite unit. Within the Wheeler River area, vertical offset on the footwall of the quartzite unit can be as much as 60 m; however, at the Phoenix deposit, known vertical displacements in the hanging wall sequence are always less than 10 m (Figure 7-5).
 
Mineralization hosted in the lower 15 m of the Athabasca sandstone appears to have some relationship to the extensions of the WS Fault and its various hanging wall splays; hence, movement on these faults must have continued after deposition of rocks of the Read Formation and probably the MFd member of the Manitou Falls Formation. The WS Fault and its various interpreted hanging wall splays may have been the main conduit for the mineralizing fluids. Thus, determining favourable locations along the WS Fault, where zones of long-lived permeability are present, is of critical importance. Five east-west oriented cross faults or tear faults are also observed at Phoenix. These features are not well documented in core as the majority of the structures have been replaced by high grade mineralization. They are inferred by changed in geologic strike or flexures in the geology underlying the deposit. These cross faults are believed to of enhanced the permeability of select portions of the deposit during deposition, subsequently allowing for the formation of thicker and high grade uranium mineralization.
 
7.5.2
Gryphon Deposit
 
On a property scale, the Gryphon deposit is situated within a dilation jog or releasing bend along the K-North trend, a highly prospective northeast striking metasedimentary corridor along the Wheeler River property’s northwest boundary. Regionally the K-North trend geology strikes 035o to the northeast and dips moderately at -500 to the southeast. In the immediate vicinity of Gryphon, there is a prominent change in geologic strike from the regional 035o to 020o. The mineralization at Gryphon is interpreted to have formed from the mixing of oxidized basinal uraniferous fluids with reduced basement ferrous fluids resulting in the co-precipitation of uraninite and hematite. To facilitate this mixing of fluid within the basement, a dilational structural setting is required to allow for the ingress of basinal fluids. It is interpreted that the subtle change in strike, or jog, coupled with the regional northwest directed compression allowed for basement dilation at Gryphon. This is supported by core observations which support a reverse-sinistral sense of movement proximal to the deposit.
 
On a deposit scale, the plunge of the deposit to the northeast is controlled by structural dilation as a result of reverse-sinistral faulting over shallower foliation dips. Higher grades and thicknesses tend to correspond with larger fault displacements. Five main fault groups are recognized, though several other minor faults are also present throughout the deposit area (Figure 7-7). These structures are generally located at the contact between the less competent graphitic pelitic gneisses and more competent quartz-pegmatites, pegmatites, and pelitic gneiss units. The faults are brittle in nature and can be described as a combination of cataclasites and gouges, and intervals of blocky and friable core.
 
 
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1)
The Offset Fault and associated splays occur at the contact with the Upper Graphite and its overlying pelitic gneiss. It is interpreted to be conformable with the local geology having a strike of 020° and dip of -050°. The Offset Fault and its associated splays are responsible for over 60 m of known unconformity displacement. The unconformity is displaced downward to the northwest in a series of steps over a 100 m cross strike distance. To date no mineralization has been found to be associated with the Offset Fault.
 
2)
The G-Fault and associated splays occur at the lower contact of the Upper Graphite unit and its underlying Quartz-Pegmatite Assemblage. In general its orientation is conformable to the geology with a strike of 020° and dip of -050°. However, mineralization generally occurs along the G-Fault and its associated fault strands where a shallowing of stratigraphic foliation is observed, between -30° and -50°. The shallowing of foliation in combination with reverse sinistral movement have provided a zone of dilation, amenable to fluid movement and uranium precipitation. Five to ten metres of unconformity displacement have been recorded along its strike. The G-Fault form the principal and most significant structure related to the Gryphon deposit.
 
3)
The Basal Fault, subordinate to, but sharing many structural characteristics with the G-Fault occurs over 200 m to the northwest of the G-Fault within the pegmatite-dominated footwall units with minor variably graphitic pelitic gneiss. Similar to the G-Fault, mineralization is associated with a shallowing of foliation, though it is less pronounced within the pegmatite-dominated sequence. No appreciable unconformity offset is associated with the subcrop of the Basal fault at the unconformity.
 
4)
The Linkage Faults, representing tension fractures, occur within the Basal Pegmatite unit and as the name suggests link the Basal Fault and G-Fault through a network of fault splays occurring discordant to the deposit geology. It is interpreted that the Linkage Faults formed as a result of prominent reverse faulting along the G-Fault and subsequent tensional fracture development at high angles into the Basal Pegmatite unit (Riedel shear model). To date three primary Linkage Faults (or fault zones) have been identified that vary in thickness from two metres to 20 m and have a minimum strike of 50 m. They follow the deposit strike of 020° but are generally much shallower in dip, ranging from -10° to -30° to the southeast. Higher grade uranium intersections are common where the Linkage Faults intersect the G-Fault and Basal Fault, but are quite variable along the Linkage Faults themselves.
 
5)
Five cross-cutting fault zones have also been noted within the deposit area. These spatially defined zones are characterized by a high-frequency of west to northwest striking faults and fractures with steep dips of variable orientation. The zones are somewhat regularly spaced across the deposit every 100 m to 150 m. The timing and kinematics of these fault zones is not well understood, however, they are interpreted to have been reactivated over time and most commonly display a normal sense of movement. The most northeastern and southwestern sub-vertical faults appear to play a role in the morphology of the mineralized lenses, primarily the A and B series lenses. Where mineralization occurs in proximity to these sub-vertical structures its primary plunge of 030°, as observed from an inclined longitudinal section, shallows considerably to 010° to 015°, suggesting that the structures are pre- or syn-mineralization. Faults associated with these zones have also been interpreted to offset mineralization, compartmentalize mineralization, or in some cases are mineralized themselves.
 
 
 
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Figure 7-7: Cross-section of the Gryphon Deposit Showing Significant Interpreted Structures.
 
 
 
 
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7.6
Mineralization
 
7.6.1
Phoenix Deposit
 
The Phoenix uranium deposit can be classified as an unconformity-associated deposit of the unconformity-hosted variety. The deposit straddles the sub-Athabasca unconformity approximately 400 m below surface and comprises three zones (A, B, C) which cover a strike length of 1.1 km. The deposit’s A and B zones comprise an exceptionally high grade core surrounded by a lower grade shell. The deposit is interpreted to be structurally-controlled by the WS shear, a prominent basement thrust fault which occurs footwall to a graphitic-pelite and hangingwall to a garnetiferous pelite and quartzite unit. A minor amount of basement, fracture hosted mineralization is evident extending below the north part of Zone A.
 
Mineralization within the Phoenix deposit lenses is dominated by massive to semi-massive uraninite associated with an alteration assemblage comprising hematite, dravitic tourmaline, illite and chlorite. Secondary uranium minerals, including uranophane, and sulphides are trace in quantity.
 
Average trace metal concentrations for Phoenix assay samples greater than 0.2% U3O8 are as follows: 576 ppm Ni, 194 ppm Co, 319 ppm As, 2,092 ppm Zn, 18 ppm Ag, 7,176 ppm Cu, 9,143 ppm Pb, 266 ppm Mo and 35 ppm Se. Average concentrations of Ni, Co and As are at the low end of the range found in other uranium deposits in the Athabasca basin.
 
7.6.2