Uranium Revival: Denison Mines Resumes Operations At McClean Lake As Prices Soar

Denison Mines DNN and joint venture partner Orano Canada have announced the resumption of operations at the McClean Lake uranium mine in northern Saskatchewan, Canada. The decision to restart the McClean Lake Joint Venture (MLJV) comes after a hiatus since 2008, when weak uranium prices led to the suspension of operations.

“The restart of uranium mining at McClean Lake is a notable milestone for the MLJV and Denison,” said Denison's President and CEO David Cates, whose company owns a 22.5% interest in the venture.

Orano Canada, which has the major 77.5% stake, is a subsidiary of the second-largest global uranium miner, Orano SA, majority-owned by the French state.

Two partners have strategically invested in a proprietary mining method called Surface Access Borehole Resource Extraction (SABRE). This innovative technique, patented by Orano (formerly Areva Canada) in 2013, selectively extracts high-grade uranium ores from the surface, contributing to improved project economics.

Now read: As Spot Uranium Climbs To New Highs, Cameco Struggles To Regain Its Footing

Mining activities are scheduled to recommence at the McClean North deposit in 2025, targeting an output of approximately 800,000 pounds of uranium for that year. The partners have invested in preparing the site and equipment for continuous commercial operations, with the installation of eight pilot holes planned for the first mining cavities.

The revival of McClean Lake boosts Denison, providing modest near-term cash flow as it develops the flagship Wheeler River project.

BMO Capital Markets uranium analyst Alexander Pearce noted that the decision underscores the support of current spot prices for brownfield restarts, emphasizing the expected near-term supply deficit. Per TipRanks, Pearce has kept a Hold rating on Denison since October 2023.

Recent developments in the uranium market, including the 16-year high spot prices exceeding $100 per pound, have played a pivotal role in these decisions. The surge in uranium prices reflects production risks highlighted by major uranium producer Kazatomprom and geopolitical dynamics, such as the U.S. bill seeking to restrict nuclear fuel imports from Russia.

As uranium prices continue climbing, analysts anticipate an increased focus on nuclear energy in global climate change mitigation efforts. Rising prices have spurred the revival of dormant uranium mining operations, with expectations of more restarts and new constructions in 2024.

Also read: Canada Wants To Increase Critical Mineral Production, But China’s Involvement Raises Concerns

Photo: Shutterstock