In a Feb. 5, 2018, research note, analyst David Talbot relayed that Eight Capital raised its target price on Denison Mines Corp. (DML:TSX; DNN:NYSE.MKT) on the heels of an increased Gryphon deposit resource at its 63.3%-owned, joint venture Wheeler River project. The new target price is CA$1.70 per share, up from CA$1.60 per share.
Based upon 210 holes, resources at Gryphon rose 48%, or by 21 million pounds (21 Mlb) U3O8, Talbot reported. The Gryphon deposit now hosts an estimated 61.9 Mlb U308 Indicated resource and a 1.9 Mlb Inferred U3O8 resource. These quantities compare to the total 43 Mlb resource calculated in September 2015.
Additionally, Talbot noted, the A1 high grade zone at Gryphon "is taking shape." It hosts 23.7 Mlb U3O8 at grades of 7.6%. This zone accounts for "~40% of Gryphon's resources at nearly triple average project grade. This high grade and small footprint should help boost project economics early in mine life."
In contrast to growth at Gryphon, resources at the Phoenix deposit declined to 53% from 63%, Talbot indicated. The resource there stands at 71.3 Mlb U3O8. However, "resource additions elsewhere should positively impact pending economics by extending Gryphon life of mine, allowing for increased production from favorable basement hosted rocks," the analyst added.
Incorporation of the newly estimated Gryphon resources boosts Wheeler River's total estimated U3O8 resource to 135.1 Mlb Indicated and Inferred, thereby increasing confidence in the project, Talbot indicated. Wheeler River is now "the largest undeveloped uranium project in the eastern Athabasca."
A project prefeasibility study is expected this year.
Eight Capital recommends Denison Mines as a Buy. "Denison remains one of our top uranium picks given its long-term development and growth potential" at Wheeler River," said Talbot.
Denison is currently trading at $0.57.
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Disclosures from Eight Capital, Denison Mines Corp., Target Revision, Feb. 5, 2018
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