Listen to Fission President and CEO, Ross McElroy, as he shares his thoughts on the newly published feasibility study. For those without audio access, the transcript is also included below.
Fission Blog [00:00:00] With us today on the Fission blog is our President and CEO, Ross McElroy, who's here to talk about the results from the new feasibility study. Ross, this is our biggest news for some time, and it's the culmination of a great deal of hard work by the Fission team, the company contractors and the independent engineering consultancy that you hired to complete the study. Now, there are a lot of new investors coming into the uranium sector and into mining, so I'd like to ask first for a brief explanation of what a feasibility study is and what's important.
Ross McElroy [00:00:27] Well, when it comes to mining, the feasibility study incluces the most detailed mine planning, project development, and it factors in all the fixed and operational costs and determines ultimately just how profitable the operation will be to present you with an accurate, projected, bottom line economic study.
For any mining developer, it's really considered the definitive economic study with which to make a development and production decision. It's important because you can't move forward to a construction decision and obtain project financing without having a feasibility study in place. So, it really is a true milestone.
Fission Blog [00:01:05] Analyst consensus is certainly very positive in terms of the project economics and small environmental footprint. But what for you are the top highlights?
Ross McElroy [00:01:13] A number of things really stand out for me. We've added three additional years of mine life for a total of ten years. If you're looking to put a project into production, then proving that you have a decade or more of runtime is crucial.
We also have a major increase to the net present value or the NPV, which at the end of the day tells you how profitable your operation will be. The NPV is the single most important factor in the evaluation of any mining project, and ours grew by more than 70% compared to the pre-feasibility study for a total of just over $1.2 billion after tax.
We have an increased internal rate of return or IRR at just over 27% after tax. We've managed to keep our cash cost at a little over $13 Canadian per pound. That's sub $10 US per pound and allows us to be one of the lowest cost operators in the world.
But I think one of the biggest wins for us is in our initial CAPEX. The market was expecting a big jump in CAPEX because of the high inflationary environment that we're in. However, we're fortunate because we have a shallow, high grade deposit that will have a relatively low risk and fast construction time. Our deposit style, combined with the great mine planning, has allowed us to benefit from a small reduction in CAPEX.
Fission Blog [00:02:32] Why do you think the numbers are so much stronger than the pre-feasibility study, which itself showed the potential for economically robust production?
Ross McElroy [00:02:39] There's a couple of reasons why the economics are so strong. Obviously, uranium prices have risen in the last few years, but we've also added a large high-grade zone to the mine plan. And then on top of that, you have an incredible in-house team. So, when I took over as CEO over two years ago, the first thing I did was to re-tool our team for development. So, although the feasibility study was largely conducted by Tetra Tech, one of the world's top engineering companies, the study as a whole was run by our vice president of operations, Gary Hayward. Not only is he the former general manager of chemicals, McArthur River Mine, but he's also one of the leading mine engineers in the uranium sector.
Fission Blog [00:03:19] And what about the environmental side of things?
Ross McElroy [00:03:21] Well, the feasibility study also looks at your environmental footprint. And I'm pleased to say that we are equally strong. Having a shallow high-grade deposit reduces the physical volume of ore that we have to mine and process. Also, we made the decision not to reroute the highway around the tailings management facility. This means less disruption to the environment, less cost, and is also in line with what the local communities wanted. On top of that, we have ten years of environmental baseline studies, so we have an incredible database of information that has helped to guide the mine plan.
Fission Blog [00:03:54] So now that we have the feasibility study complete. Where do you think that positions Fission?
Ross McElroy [00:03:58] Well, I think it's important for investors to know that the sort of economic numbers that we have, and the team that we have, and the community relationships that we have, it all comes together to put us in the very top echelon of uranium projects worldwide. There's a lot of hype out there right now from uranium juniors hoping to catch a positive uranium wave. But the reality is that only a few projects will likely see production and we have one of them.
Fission Blog [00:04:24] And where do you think we stand in terms of our next steps?
Ross McElroy [00:04:27] Well, the main step remaining before we reach construction decision is the environmental impact assessment and the associated permits and licenses that are granted from that process. Having such a large multi-year database for the baseline environmental studies, which have been conducted with the help of local Indigenous experts, will really help to smooth out the EIA stage as to permitting. Our team has a great deal of experience in that area, so I'm confident that we're very well positioned.
Fission Blog [00:04:57] Well, that's all we've got time for now. It's been great speaking with you Ross. We'll get you back on here again soon for another update as we continue to deliver on Fission's development plan.