Costs might be up, but the decision by Denison Mines Corp. (NYSEMKT:DNN), along with partners Areva Resources Canada and OURD Canada Co., to proceed with the Midwest project in Northern Saskatchewan is a welcome one, according to Raymond James.
In a research note Mr. Jaworski said,
We are slightly disappointed with the higher capex estimate, however, we are generally pleased with the announcement. Management's formalized decision adds momentum to the project and reinforces the project's timelines and strategic value.
He added that although the estimated capital expenditure of $400-million for the project was 25% higher than his C$318-million estimate, only C$20.4-million of the overrun is attributable to Denison.
The new project, which is located 15 kilometres west of the McClean Lake operation, is expected to produce 36 million pounds of uranium, with annual rates reaching as high as 9 million pounds per year.
Mr. Jaworski maintained his "outperform" rating, and left his C$13 price target unchanged.