Denison Mines (TSX: DML; NYSE-A: DNN) has begun full construction at its Phoenix uranium project in northern Saskatchewan after completing site preparation and starting installation of the first perimeter freeze wall.

First production from what Denison says will be the Athabasca Basin’s first commercial in-situ recovery mine is scheduled for mid-2028, according to a Tuesday statement.

The project carries a budget of $700 million, or US$500 million, and is located about 800 km north of Regina. At peak output, Phoenix could produce about 9 million lb. of uranium oxide a year.

“Achieving these positive early results demonstrates the readiness and commitment of Denison and our construction partners as we advance this unique nation-building project to become Canada’s first new large-scale uranium mine since Cigar Lake,” CEO David Cates said.

Denison said the mine would add a major new source of Western uranium at a time when more than 30 countries are seeking to triple nuclear capacity by 2050, citing International Atomic Energy Agency data. It would also be the first commercial test of in-situ recovery in the Athabasca Basin, where the method has never operated commercially.

That makes Phoenix a useful reference point for the district because the basin is long known for very high-grade uranium deposits, but commercial development has historically centered on underground mining methods. If successful, Phoenix could broaden development options for other high-grade deposits in the area.

Denison’s Toronto-listed shares fell 4.9% to $3.91 each, after trading between $2.58 and $4.08 over the past 12 months. The company has a market capitalization of $3.54 billion.

Construction update

Denison said crews have completed more than a fifth of civil works and nearly all ground preparation for the processing plant and the wellfield, the network of injection and recovery wells. The company plans to add a second shift so work can continue nearly around the clock on weather-sensitive tasks. Concrete pours for the plant and main power transformer foundations are expected to begin next month.

The freeze wall is intended to isolate the first mining area and help contain the solution pumped through the deposit to dissolve uranium. Recovery wells will bring the uranium-bearing solution back to surface for processing into uranium oxide.

Temporary camp capacity has been expanded to nearly 400 people as the workforce grows. A concrete batch plant has arrived at site, a nearby quarry is producing aggregate, and crews are preparing an airstrip and the site power network. SaskPower has completed a 138-kilovolt transmission line to Phoenix.

Engineering is about 90% complete, and 95% of the main design packages have been issued for construction. The Canadian Nuclear Safety Commission approved the federal environmental assessment and construction licence in February, after Saskatchewan cleared the project last July.

Project case

Phoenix contains 56.7 million lb. in proven and probable reserves within 219,000 tonnes grading 11.7% U3O8 on a 100% basis. The mine plan covers about 10 years.

A 2023 feasibility study, updated this year for capital costs, estimated a post-tax net present value of $1.57 billion at an 8% discount rate and a 73% internal rate of return. It forecast average all-in costs of US$18.41 per pound. Denison expects to spend $600 million after its investment decision, on top of about $100 million already spent.

Denison owns 90% of the broader Wheeler River project directly and another 5% through its half-owned JCU subsidiary. Wheeler River also hosts Gryphon, a proposed underground mine that Denison expects could follow Phoenix and use infrastructure built for the first operation.

Phoenix still needs to prove in-situ recovery at commercial scale in the basin, stay on its two-year construction schedule and control costs.

Funding base

As of March 31, Denison held $418 million in cash and equivalents, 1.85 million lb. of U3O8 worth about $216 million and $33 million in uranium investments. The roughly $670 million pool gives the company significant funding flexibility, although much of it is uranium rather than cash.

The company has fixed prices for 950,000 lb. scheduled for delivery through June 2027 at an average US$92.05 per pound. Those sales are expected to generate US$87.5 million through June 2027.