Fission Uranium Corp T.FCU

RE:HC Wainright - Buy Target $1.40 U.S.

[medvic1]

$1.40 ? for sure, maybe even more after split 1:10...

Grayhawk50 wrote:

Fission Uranium Corp.

FCUUF: Price: $0.18; Market Cap (M): $87
Rating: Buy; Price Target: $1.40

Heiko F. Ihle, CFA

Tyler Bisset

Marcus Giannini

Initiation of Environmental Assessment Process; Federal and Provincial Discussions; Gold Credit Potential; Reiterate Buy

Click here for complete report and disclosures

 

Commencement of Environmental Assessment phase. On February 20, 2020, Fission Uranium announced that the firm remains on track to begin the Environmental Assessment (EA) process for its Patterson Lake South (PLS) property. PLS is located in the Athabasca Basin region of Canada and contains higher grades than most other projects mined globally today. Fission management intends to submit a Project Description and a draft of the Terms of Reference to the province of Saskatchewan in order to initiate this process. Looking ahead we expect the firm to submit both, the Project Description and Terms of Reference, during 1Q20.

Management has already met with various federal and provincial regulatory authorities. These groups include the Canadian Nuclear Safety Commission and Natural Resources Canada. Additionally, the company has previously met with the Saskatchewan Ministry of Environment for Environmental Assessment and Climate Change, as well as Saskatchewan’s Government Relations, Aboriginal Consultation Group. The firm continues to steadily progress its PLS project beyond the recent Prefeasibility Study (PFS) and anticipates the completion of this EA to substantially de-risk PLS going forward.
 
Gold as a unique by-product credit. While the PLS project is expected to focus on uranium, we nonetheless highlight the potential for a gold credit with Indicated grades listed at an average grade of 0.61 grams per tonne (gpt) for a total of 43,100 ounces (oz) of gold. We further note that the PFS estimates a total of 19,600 oz of gold at an average grade of 0.50 gpt in the Inferred classification. Although gold recoveries are currently not included in the PFS, we stress that gold at the site can potentially be extracted without interference into throughput and recovery rates at the proposed uranium processing plant. While the associated gold remains relatively marginal when compared to the available uranium resource, this credit could nonetheless provide a low-cost benefit with few operational drawbacks and limited capital requirements. As we currently assign no value to the gold at PLS, this optionality provides the potential for value and upside at no additional cost.
 
We reiterate our Buy rating on Fission Uranium shares and maintain our price target of $1.40 per share. Our valuation remains based on a DCF of operations at PLS, utilizing an unchanged 10.0% discount rate, and a long-term uranium price estimate of $50/lb, or about C$66.50/lb beginning in FY24. We then add cash and the 32.3M pounds (lbs) of Fission's uranium resource at an average value of C$6.25/lb. We emphasize that the company carries no debt. We note strong economics and geology associated with the Triple R deposit in addition to a variety of geopolitical advantages linked to operating in Canada in general. We further continue to view Fission as a potential takeover target should the current uranium market strengthen.
 
Risks. (1) Uranium price risk; (2) financing risk; (3) political risk; and (4) operating and technical risk.

Heiko F. Ihle, CFA
212-356-0510
[e-mail]

Tyler Bisset
646-975-6955
[e-mail]

Marcus Giannini
212-916-3978
[e-mail]