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Overview

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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 - the most significant high-grade, near-surface project in the region. Fission has also discovered two other major, high-grade zones and has outlined the largest mineralized trend in the region.

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 mineral 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 deposits to the past producing Cluff Lake uranium mine.

 

PLS hosts the most significant undeveloped high-grade, near-surface deposit in the Athabasca Basin region. From Discovery to Resource Estimate, the Triple R Deposit was achieved in just two years of drilling. 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% U3O81
  • 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% U3O81

As showcased by the Triple R deposit and nearby zones discovered at PLS, mineralization at the project is characterized by being high-grade and shallow. In fact, the Triple R deposit is the only high-grade deposit in the entre Athabasca Basin region with substantial high-grade mineralization starting just 50m from surface.  The deposit and additional zones, which are part of a 2.63km mineralized trend at PLS, remain open in several directions.

Additional Zones to be added to resource

In addition to the Triple R deposit, Fission has discovered two major, high-grade zones: R840W and R1620E. Both zones exhibit wide, high-grade intercepts at shallow depth and the R840W zone, which includes the recently-merged R600W zone, is based on land and saw substantial growth during the summer 2016 drill program.

The zones will be targeted for additional growth drilling in the winter 2016/17 program and have the potential to be added to an updated resource estimate planned for early 2017.

An independent Preliminary Economic Assessment (PEA) study carried out in 2015 has highlighted the potential for very strong economic analysis at PLS. It covers the Triple R deposit (R00E zone and R780E zone) and does not yet include the R840W, R600W or R1620E zones.

  • Average OPEX of $16.50/lb (US$14.02/lb) U3O8 over the life of mine
  • Base case2 pre-tax Net Present Value ("NPV") of $1.81 billion, post-tax NPV of $1.02 billion (10% discount rate)
  • Base case2 pre-tax Internal Rate of Return ("IRR") of 46.7%, post-tax IRR of 34.2%
  • Pay back estimated at 1.4 years (pre-tax), pay back at 1.7 year (post-tax)
  • 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
  • Mine life of 14 years
  • Process recovery of 95%, supported by metallurgical testwork
  • Base case2 pre-tax Net Cash Flow over the proposed mine life of $4.12 billion, post-tax Net Cash Flow of $2.53 billion
  • Estimated CAPEX of $1.1 billion

Fission Uranium has 100% ownership of the PLS Property, which comprises 17 mineral 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 deposits to the past producing Cluff Lake uranium mine.

The province of Saskatchewan in Canada has a 60 year history of uranium mining and strong support exists at a local, regional and provincial level. Permitting is straight-forward and well-understood.

(1) Mineral Resources are reported within the preliminary pit design at a pit discard cut-off grade of 0.20% U3O8 and outside the design at an underground cut-off grade of 0.25% U3O8 based on a long-term price of US$65 per lb U3O8 and PEA cost estimates. The PEA is preliminary in nature and includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied that would enable them to be categorized as Mineral Reserves.  Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.   There is no certainty the results of the PEA will be realized
(2) PEA Base case used US$65/lb and an exchange rate of US$0.85 :1Cdn$
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