SPROTT
F3 Uranium (FUU CN) Initiation: West Athabasca’s new major uranium discovery RECOMMENDATION:
BUY PRICE TARGET: C$0.60/sh RISK RATING: VENTURE W Athabasca discovery neighbouring 130-337Mlb peers F3 Uranium (formerly Fission 3.0) is a TSXV-listed uranium explorer led by CEO Dev Randhawa (former CEO of successful discoveries Fission Uranium and Strathmore Resources). F3’s flagship PLN property is located NW along strike of NexGen’s Rook I (known for the Arrow deposit) and Fission’s PLS in the SW Athabasca basin, Saskatchewan. The 5.5m @ 18.6% U
3O
8 discovery hole put PLN on the map as the next big shear-hosted discovery in the Athabasca.
105m of strike already drilled, multiple paths to 50-100 Mlbs Since the Nov 2022 discovery hole, F3 has delineated the JR zone over a 105m strike length, with average thickness of 11m (using the best intercept per fence) and ~20m up-down dip. At 6.6% U
3O
8 (average of each fence’s best grade x thickness), we estimate ~15Mlbs have been drilled out already on existing hits. This lifts to 50-70Mlbs if the shear zone (~70m up dip to the unconformity and down dip to the base) is mineralized. JR is open along strike and at depth, with 12,000m of drilling completed and ~12,000m planned this summer.
Upside includes pods along strike (FCU) or parallel shears (NXE) There are two different blue sky upside scenarios here in our view, noting that PLN is just 20km from Fission’s PLS (130Mlbs at 1.8% U
3O
8) and 25km from NexGen’s Arrow (291Mlbs at 2.0% including 182Mlbs at 17.8% high grade zone). PLS consists of
multiple orebodies along strike (5 deposits over 3.2km) of which the largest, R780E, consists of 102.5Mlbs over ~700m of strike and 20-30m thick. Arrow consists of
four parallel shear zones including 224Mlbs over 200m of strike in the high grade A2 shear. Both are possibilities at this stage with PLN open along strike and not drilled off laterally. Although speculative at this stage, we think PLN has potential to be 100Mlbs plus and is the only ongoing new discovery in the basin with indications of this size and grade.
Nearby NXE and FCU projects provide downside protection Although we like the asymmetric upside that exploration offers, particularly in the Athabasca, we also like the downside protection here. PLN is within trucking distance of Fission and NexGen and at just ~200-220m below surface, we think the worst case scenario potential is to be high grade satellite feed. If we assume a conceptual inventory of ~118kt at 5.2% (98kt at 6.6% plus 20% dilution and 5% ore loss), C$200m of conceptual mining capex (incl C$40m for the decline) and C$451/t operating costs, driving C$460m of FCF at US$60/lb.
Initiate with Buy rating, C$0.60/sh PT We value F3 using an in-situ valuation driving off a risked future estimate of 75Mlbs which we assign a US$5/lb valuation for C$500m conceptual NAV. We subtract C$30m for G&A and exploration, driving a risked C$531m NAV estimate. We assign this a 0.5x multiple, reflecting the early stage of exploration. On today’s fully diluted share count of 453m, we generate a NAVPS of C$1.12/sh, which drives our C$0.60/sh price target at a 0.5x multiple.