Denison buys out Cameco in Wheeler River JV

5th September 2018 By: Mariaan Webb - Creamer Media Senior Deputy Editor Online

Uranium explorer and developer Denison Mines has increased its interest in the Wheeler River uranium project to 90% by buying out Cameco Corp’s minority interest in the undeveloped high-grade project in the eastern Athabasca basin.

Denison will acquire Cameco’s interest in the joint venture (JV) for 24 615 000 shares at a deemed price of $0.65 a share, valuing the transaction at $16-million, the company announced on Tuesday.

Currently, Denison owns 63.3% of the JV, which under a previous earn-in agreement, will increase to about 66% by the end of 2018, while Cameco’s interest of 26.7% will decrease to about 24% by year-end and JCU's will remain at 10%.

The transaction is subject to certain rights of first refusal that JCU can exercise. In terms of the JV, JCU can purchase its proportional interest of Cameco's share of the Wheeler River JV alongside Denison. Based on Denison's expected ownership interest of about 66%, and JCU's ownership interest of 10%, JCU would have the right to purchase about 13.16% of Cameco's expected 24% interest in the Wheeler River JV. 

Denison noted that should JCU elect to exercise the right of first refusal, the purchase price would reduce to $13.9-million and Denison would own about 86.84%, rather than 90%, of the Wheeler River JV.

“Denison, Cameco and JCU have worked together, since 2004, to advance Wheeler River to the point of being the largest undeveloped uranium project in the eastern Athabasca basin. We believe this transaction represents a unique opportunity to add to our existing controlling interest in the project and offer significant value accretion to Denison shareholders," said Denison president and CEO David Cates.

Wheeler River project is being advanced to a development decision and Cates reaffirmed that the prefeasibility study would be completed by the end of September.

Wheeler River is host to the Phoenix and Gryphon uranium deposits, which are estimated to contain combined indicated mineral resources of 132.1-million pounds of triuranium octoxide (U3O8) at an average grade of 3.3% U3O8, plus combined inferred mineral resources of three-million pounds U3O8 at an average grade of 1.7% U3O8

The project is situated along the road and power line that runs between Cameco's McArthur River mine and Key Lake mill complex in northern Saskatchewan.

Meanwhile, Denison announced the appointment of Tim Gabruch as VP for commercial. He will be based in the Saskatoon office and will be tasked with building an "end to end" sales, marketing and commercial function that is consistent with the company's entrepreneurial culture and long-term strategy surrounding the future development of its flagship Wheeler River uranium project.

Gabruch has nearly two-and-a-half decades of experience in the uranium mining and nuclear energy industries, having spent 23 years with Cameco in various marketing and corporate development roles.