Denison Mines Corp. is a Canadian uranium exploration and development company focused on the Athabasca Basin region of northern Saskatchewan.
It is the 70th anniversary of Denison Mines. Congratulations! But let us first talk briefly about you, David. Your education is in accounting. So what led you to uranium mining?
This is an interesting story. I often do not talk much about my accounting background because I sometimes find that accounting has a stigma to it, but indeed, I have a bachelor's and master's in accounting from the University of Waterloo. The university did a great job setting us up for work right away through a co-op internship program during university. Much of my early work experience was with PwC in Toronto, where I was assigned to major mining clients, including Barrick Gold's audit. This led me to become a mining specialist, despite initially knowing little about the field.
Shortly after completing the work experience required to obtain the CPA designation (Chartered Professional Accountant), I decided to move into industry and worked for Kinross Gold in Toronto, handling international and Canadian tax. I left Kinross after a few years and joined Denison almost 16 years ago when it had international operations in the United States, Africa, Mongolia, and Canada. In 2008, the nuclear renaissance was in full swing despite the financial crisis and Denison had aspirations for global growth. The Japanese tsunami and Fukushima nuclear incident in 2011 significantly influenced the company and my career path. Denison decided to divest its high-cost international assets and focus on developing sustainable, low-cost assets in Saskatchewan, like the Phoenix deposit, which was discovered in 2008.
Phoenix is part of the Wheeler River Project. Could you tell us how things are progressing there? As I understand, you plan to get the Phoenix deposit into production soon…
Yes, overall it is progressing well. Our timeline for our flagship Phoenix project is focused on making an investment decision by the middle of next year, allowing us to start construction by the end of 2025. It will take about two years for construction, which would translate into first Phoenix production by 2027 / 2028. Advancing Phoenix during years of challenging markets has proven to be incredibly rewarding for our shareholders; however, it has been a long journey. At this point, permitting is the key item on our critical path. We are regulated by both the Canadian federal and Saskatchewan provincial governments, and we have been actively advancing the permitting process since 2019.
While everything is progressing largely as planned, extended timelines for approvals present challenges for Canadian uranium projects and our country’s ability to be globally competitive. Given the added federal regulation by the Canadian Nuclear Safety Commission, uranium mining in Canada is subject to additional regulatory oversight when compared to most other mining projects.
We are in a unique position, because we are also a partner in the fully-permitted McClean Lake uranium mining and milling joint venture in Saskatchewan with the French Orano, where we recently announced a decision to restart mining in 2025. While we are focused on advancing Phoenix through the approvals process and into production, we are already approved to resume mining with Orano at the McClean Lake, where Denison owns a 22.5% interest.
The Phoenix deposit is particularly interesting due to its sustainability credentials as an in-situ mine. Do you plan to replicate that model elsewhere?
ISR (in-situ recovery) is the most commonly used method for uranium mining globally and offers many benefits from a sustainability standpoint. Denison is the industry leader in the advancement of the ISR method in the Athabasca Basin, with Phoenix on track to be the first ISR uranium mine in the region. We believe our approach with ISR can achieve superior sustainability standards when compared to conventional mining methods. Our high-grade deposit at Phoenix translates into a very small footprint with limited surface disturbance, and the ISR mining method eliminates the generation of conventional tailings.
Plus, given our small surface footprint, we are able to deploy ground freezing technology to create a physical barrier between our ISR mining area and the surrounding environment, which is expected to achieve a higher standard of environmental protection than is achievable from conventional low-grade ISR operations.
We are actively working to replicate the success of Phoenix at other deposits. Recently, we announced progress at the Midwest deposit, another joint venture with Orano. The results of recent field tests at Midwest indicate the deposit is potential amenable to ISR mining. Similar testing at our THT deposit at the Waterbury Lake project, a partnership with Korea Hydro Nuclear Power, has also shown promising results evaluating ISR viability.
After the Fukushima accident, you contracted your geographical presence. Do you envisage the opposite at some point in the future?
Not really. Part of that is due to the history of managing a portfolio of international assets that were not very good. While there is interest in all uranium assets now, we are skeptical about the economic viability and sustainability of many international assets. Investing in such assets would likely deteriorate our overall asset quality, and we have seen how challenging that can be. For example, our former mines in the U.S. rarely made money, even during good times, and required exceptionally positive uranium market conditions to generate minimal profit.
It would be difficult to justify investing in marginal assets again. Most international assets fall into this category, except for those in Canada and Kazakhstan, where sustainable, low-cost production is possible. However, for obvious geopolitical reasons, we have no plans to venture into Kazakhstan. Our focus remains on executing on our business plans and building a sustainable low-cost mining company with high-quality assets.
Last year you asserted that the demand for uranium is predictable. Do you still hold that view a year later, given recent significant price surges?
Yes, the demand for uranium remains predictable, especially once a reactor is built or under construction. The amount of uranium these reactors consume is very predictable and modeled accurately. Reactors aim to operate at high rates of availability, ensuring a steady and predictable demand for uranium. The growth rate of new reactors, however, is less predictable and certainly provides a meaningful amount of upside potential for the demand forecast for the existing global nuclear reactor fleet.
Despite the surges in prices, the long-term demand fundamentals remain strong. Countries are increasingly recognizing the role of nuclear energy in their energy mix, driven by the need for reliable and low-carbon power sources, and while uranium prices have increased, they represent a comparatively much smaller portion of the cost of nuclear power generation when compared to typical inputs for other sources of power generation – thus insulating demand from increases in the price of the commodity.
A number of countries, including the US, recently declared that they intend to triple their nuclear energy production by 2050. What do you think is the main driver behind that?
It is a convergence of factors. Those in favor of nuclear energy are not opposed to renewables; rather, they have seen the limitations of renewables in providing consistent, reliable power. Renewables, by nature, are susceptible to variability and cannot always meet demand. There is a broad recognition that while renewables are desirable, they need to be paired with supplemental and reliable power sources to ensure stable energy supply.
Geopolitics also play a significant role. Nuclear energy provides a way to reduce reliance on fossil fuels that are often sourced from geopolitically unstable or undesirable regions. For example, European countries are looking to diversify away from Russian gas. Nuclear power offers a reliable, cost-efficient, and low-emission alternative that can meet these needs. It helps solve multiple problems for policymakers, including energy security, economic efficiency, and environmental sustainability.
Speaking of geopolitics, we must mention the role of Kazakhstan for the uranium market. Do you sense a change in attitude from Kazatomprom in the context of current global tensions?
Kazatomprom has been a reliable supplier of uranium for many years, and their partial IPO brought in many credible people to support its London listing. However, there has been a noticeable shift in Kazatomprom's approach, moving towards what appears to be a more nationalistic stance. This is happening when many Western utilities are concerned about increasing influence from Russia and/or China in the region. When combined with the recent nationalization of uranium assets in Niger, the appetite for geopolitical risk among Western utilities is tepid.
As a result, a trend of self-sanctioning among Western utilities has emerged, seeking to secure alternative sources of uranium. Canadian supply is in high demand, but it is quite concentrated in the hands of Cameco, which has a history of operational challenges with its complex underground mining operations. Utilities are keen to see new sources of Canadian supply and to reduce the risk of supply concentration with a single producer.
Do you think that current uranium high prices will be sustained?
I do not see a driver that can lead to sustained softer prices. The uranium market is very small, both in terms of the number of players and the dollar value of activity compared to other commodities. There are just about 450 reactors globally, and industry events like the World Nuclear Symposium in London bring everyone together in one place. This small market size impacts price behavior significantly. When a seller makes product available, even over the long term (i.e., the next 10 years), it can displace demand from today’s spot market as utilities have long-term horizons and inventories. This can lead to some volatility in the spot price, even though prices may be rising in the “term” market.
Looking at the big picture, the overall demand for uranium is strong, and while higher prices may stimulate some additional production, building new uranium mines is incredibly challenging and we believe supply is likely to disappoint, which would support a sustained period of higher prices.
While certain high-quality development projects in Canada are advancing, many of the growth projects in our industry are high-cost and in jurisdictions that are either geopolitically challenging (i.e. Niger) or operationally challenging (Australia, parts of Africa).
Taking you to a different topic, could you tell us about Denison Mines’ relationship with indigenous people in Canada?
Canada’s history with Indigenous peoples is a bit complicated, but absolutely relevant for those of us operating in the Athabasca Basin region in northern Saskatchewan, where essentially all of the uranium mining, exploration or development projects are situated in either the ancestral lands or traditional territory of Indigenous people. Although the mines and projects are not usually close to northern population centers, it is common to have multiple Indigenous groups express an interest in activities that are occurring in northern Saskatchewan due to historical and potentially ongoing use of the land. Denison has adopted an Indigenous Peoples Policy, approved by our board of directors, which guides our operations and sets us apart from other companies.
This policy has led to multiple agreements with indigenous groups for all our activities – including the earliest stages of exploration, years before project development is even a consideration. These agreements ensure predictable engagement, capacity building, and benefit sharing. Traditionally, benefits were only shared once a mine was operational, but we recognize that benefits can and should be shared earlier. Our agreements are foundational and apply to any project in a group's traditional territory. As projects advance, we negotiate impact-benefit-type agreements, like our shared prosperity agreement with the English River First Nation for the Wheeler River Project. These agreements are not only respectful but also good for business, enhancing predictability and reducing risk in a capital-intensive industry.
How do you think Denison Mines will look three years from now?
These are very exciting times for Denison. In three years’ time, we expect to be on the cusp of achieving first production at Phoenix. This milestone would transform Denison from nearly two decades without meaningful uranium production to a company generating significant positive cash flows and a pipeline of development projects.
Overall, we aspire to become a highly profitable intermediate uranium producer that leverages our portfolio of projects in Saskatchewan and our competitive advantage in deploying ISR mining within the region. Achieving this vision requires a motivated team of talented people, which we have focused on building over the past several years. Our teams are ready for the challenge, and we look forward to delivering on our ambitious plans.
