“This One’s a Monster”, David A. Talbot, Dundee Capital Markets
Patterson Lake South (PLS) is located in Canada’s Athabasca Basin, home to the world’s richest uranium mines. The project is host to the Triple R deposit â€" the only major, high-grade deposit in the region that is potentially open-pittable. Fission has recently discovered three new, large, high-grade zones and has outlined the largest mineralized trend in the region â€" currently standing at 2.58km in length.
Growth at the Triple R deposit, and exploration elsewhere on the PLS property, is driven by a highly skilled, award-winning technical team and successful entrepreneurial management. Fission Uranium has 100% ownership of the PLS Property, which comprises 17 claims totaling 31,039 ha located on the southwest margin of the Athabasca Basin. The property is accessible by all-weather Highway 955 which continues north through the area of the UEX-AREVA Shea Creek discoveries to the past producing Cluff Lake uranium mine.
- Host to the Triple R â€" the largest, high-grade, undeveloped deposit in the Athabasca Basin that is near-surface and potentially open-pittable. The current resource estimate as detailed in the PEA filed on September 14, 2015 is:
- Indicated Mineral Resources are estimated to total 2,011,000 tonnes @ 1.83% U3O8 containing 81,111,000 pounds of U3O8 including the R780E High Grade Zone estimated to contain 45,079,000 pounds U3O8 @ 18.22% U3O8
- Inferred Mineral Resources are estimated to total 785,000 tonnes @ 1.57% U3O8 containing 27,157,000 pounds of U3O8 including the R780E High Grade Zone estimated to contain 13,898,000 pounds U3O8 @ 25.06% U3O8
- The current indicated and inferred mineral resources are stated using a cut-off grade of 0.2% U3O8 for open pit and 0.25% U3O8 for underground.
- From Discovery to Resource Estimate, the Triple R Deposit was achieved in just two years of drilling.
- Including the two zones in the resource, from west to east, the five mineralized zones discovered at PLS so far are; R840W, R600W, R00E (Triple R), R780E (Triple R) and R1620E.
- The R600W zone, half a kilometer west of the Triple R deposit, is a high-grade, shallow and land-based zone that has grown rapidly since high grade mineralization was discovered in March, 2015 and remains wide open
- The R840W zone, to the east of R600W, is a high-grade, shallow and land-based zone discovered in February 2016 and remains wide open
- Anomalous radioactivity has been drilled (during the summer 2015 drill program) on the Patterson Lake Corridor (approx. 470m north of R600W zone) and on Forest Lake Corridor (approx. 17km south west of the Triple R deposit).
- PEA study completed September 2015 shows the Triple R has the potential to be amongst the lowest cost source of uranium in the world. Highlights include:
- Average OPEX of US$14.02/lb U3O8
- Base case pre-tax NPV of $1.81 billion / post-tax NPV of $1.02 billion (10% discount rate)
- Base case pre-tax IRR of 46.7% / post-tax IRR of 34.2%
- Rapid pre-tax pay back in 1.4 years / post-tax pay back in 1.7 years
- Project includes mill and avg annual production of 7.2 million lbs U3O8
- Hybrid open pit & underground mine
- Mine life of 14 years
- Metallurgical recovery of 95%
- Base case pre-tax Net Cash Flow over proposed LOM of $4.12 billion / post tax $2.53 billion
- Estimated CAPEX of $1.1 billion
- Shallow depth, basement hosted structurally controlled high-grade uranium deposit.
Preliminary Economic Assessment:
Fission’s recently-published independent preliminary economic assessment (PEA) was conducted by RPA Inc. â€" one of the most highly respected mining consultancy firms in the industry. Full results from the PEA can be found here.
Exploration History for the PLS project
The technical information in this website has been prepared in accordance with the Canadian regulatory requirements set out in National Instrument 43- 101 and reviewed by Ross McElroy, P.Geol., President and COO of Fission Uranium Corp., a Qualified Person.
Readers should be aware that the PEA is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized.
The PEA considers the PLS project as a stand-alone mine and mill operation, which includes development and extraction of the R00E and R780E zones (Triple R deposit) and that the PEA study is based on a number of qualifications and assumptions including the following (all values in C$ unless otherwise noted):
Three years of pre-production and 14 year mine life, processing nominally 1,000 tonnes per day (350,000 tonnes per year)
Total Tonnes Processed: 4.8 million tonnes at 1.00% U3O8 average grade; open pit mining of 1.56 million tonnes at 2.21% U3O8
- Underground mining of 3.25 million tonnes at 0.42% U3O8
- Process recovery of 95%, supported by metallurgical testwork
- Production of 100.8 million lbs U3O8; an average of 13 million lbs U3O8 per year for 6 years, followed by an average of 3 million lbs U3O8 per year for 8 years
- Long term uranium price of US$65 / lb U3O8
- Exchange rate of 0.85 US$ / C$1.00
- Gross revenue of $7.71 billion, less Saskatchewan gross revenue royalties of $556 million
- Less product transportation charges of $34 million
- Net revenue of $7.12 billion
- Average OPEX of $16.50/lb (US$14.02/lb) U3O8 over the life of mine
- Unit Operating Costs of $346 per tonne processed. Combined Mining $154 per tonne processed
- Processing: $114 per tonne processed
- Surface and G&A: $78 per tonne processed
- Operating cash flow of $5.45 billion
- Pre-Production capital costs of $1.1 billion
- Open pit mining $363 million (includes dyke, slurry wall, and overburden removal)
- Process plant $198 million
- Infrastructure $117 million
- Indirects $209 million
- Contingency $208 million
- Sustaining capital costs of $189 million (includes completion of overburden stripping, all underground mine capital costs, and tailings dam lifts)
- Reclamation and closure cost of $50 million
- Cash flow from operations of $4.12 billion