Fission Uranium Corp TSX:FCU refers to itself as “the right project and the right time for development”: as CEO Ross McElroy argues, high uranium prices and the increasing focus and spending on green energy is shining the spotlight on Tier One uranium projects. In our view every serious mining investor needs to have one uranium project in their line up.
Fission Uranium Corp issued an updated and larger indicated resource for its project in the Saskatchewan uranium mining district in September, with 2.69 Mt of uranium at an average grade of 1.94%. This totals 114.9 Mlb of U3O8. The company has an inferred resource of 0.64 Mt at an average grade of 1.10% U3O8. Thanks to continued work programs during the last 10 years this is one of the few high grade uranium projects advanced enough to reach production this cycle.
As we have argued on this site before, there is no road to zero emissions that does not go through nuclear, at least as a temporary option. The IEA estimates that in order to meet net zero emissions for the planet by 2050, nuclear capacity needs to double. Over 30 countries are now planning or starting nuclear power programs, while a further 20 have expressed interest in either traditional or next generation reactors.
Fission Uranium Corp has two properties in Canada’s Athabasca Basin which is also the location of the famous Cigar Lake uranium mine. This includes the West Cluff project which is just west of the past producing Cluff Lake mine, and the PLS project, which sits close to the Spitfire discovery. Long term uranium followers will recall Purepoint Uranium Group [TSX:PTU] has been exploring the Spitfire Zone.
Uranium is trading right now in the mid 50 dollar range but US buyers are signing deals at above $65. Located in Canada, Fission has great credentials as it can supply the US power station market from a friendly and adjacent jurisdiction. It is also interesting to note that the site has scope to enhance its economics, with a solid prospective zone – R840W that is not part of its pre-feasibility study.
Attractive looking Athabasca Basin project
This is the Athabasca Basin’s only shallow, high grade and undeveloped uranium project. We would expect it to be an asset that major miners will start to take more notice of as uranium demand picks up globally. Fission’s Triple R deposit alone demonstrates clear potential to be one of the lowest operational cost uranium operations in the world. It has a bottom quartile opex cost of C$13.02 per pound of uranium.
Fission Uranium Corp is pushing its PLS mine towards an Environmental Impact Assessment that it anticipates this year. Construction of the mine is expected by 2026. It should be noted that the company is planning to take this all the way to operation although investors should anticipate that some form of JV financing may come in from larger players in the space.
The company’s Triple R deposit is part of its much larger PLS site, itself five times bigger than the entire island of Manhattan. This is a large, juicy slice of prime uranium territory. Its main prospect is also right next to Canada’s highway 955.
Fission Uranium Corp backed by China General Nuclear Power
As always the shareholder register makes for interesting reading: China General Nuclear Power owns 13.7% of the company and CEO McElroy told us the company also has an offtake agreement in place as part of that. “This is going to be a year where we go forwards,” says McElroy. “We are going to really get behind the project financing.”
Investors concerned about China General’s role should note that it is not participating in the latest financing round and will be diluted down. We think the big incentive for the Chinese investor is that future offtake agreement.
Share price action has also been interesting: stock jumped in November from 65 cents Canadian to hit 98 cents. It is currently trading at 83 cents. The 52 week high is C$1.12. The miner currently has a market cap of C$579m. It is also listed in London at ticker 0UW4.
