Fission Uranium Corp. has announced strong potential economic numbers for its Patterson Lake South Uranium Project, located in the Athabasca Basin.
On January 17, 2023, Fission Uranium (TSX:FCU/OTCQX:FCUUF/FRA:2FU) released a Feasibility Study for Patterson Lake South and the “Triple R” uranium deposit hosted on that property.
Why is this big news in the uranium industry? The numbers speak for themselves.
When it comes to high-grade uranium, there is Canada. And then there is the Rest of the World.
Fission Uranium’s high-grade Triple R deposit epitomizes the high-grade uranium found in the Athabasca Basin.
Patterson Lake South is a major league uranium project. The previous PFS on this Project already laid out some strong economics for investors.
- Short mine-construction horizon: 3 years
- High IRR: 25% (after tax)
- Robust NPV (after tax): CAD$702 million
Now the Feasibility Study is out for Patterson Lake South. Good numbers just got better.
The NPV for the Project (at an 8% discount) has risen to C$1.204B. That’s an increase of more than 70% from the PFS.
The Project After Tax IRR has inched higher to 27.2% from 25%, and in turn, the payback period has slid down to a very attractive 2.6 years.
The icing on the cake for investors is that both U3O8 reserves and the Triple R mine life have also increased in the Feasibility Study.
Recent inflationary pressures have mothballed the economics of many mining projects. However, amazingly, the initial CAPEX for Patterson Lake South has actually decreased from the estimate in the PFS: down to CAD$1.155B.
And thanks to Triple R’s high grades and its shallow depth, the average unit operating cash cost for a Patterson Lake South mine is still a very attractive C$13.02/lb of U3O8 – less than US$10/lb – representing some of the lowest operating costs in the world
President and CEO Ross McElroy offered these insights to investors.
With greatly enhanced economics, including an increase of 42% to the mine life, an incredible 71.5% increase in post-tax NPV and a 10.2% growth in post-tax IRR, this feasibility study confirms the Tier1 PLS project as one of the most economically significant and elite uranium development projects in the world. [emphasis mine]
There was still more good news for investors further down in Fission Uranium’s January 17th release.
Under “Scope for Research Growth”, the Company identified three avenues for significant increases in the resources/reserves calculated in the Feasibility Study.
- The “R780E and R840W zones” are open both at depth and along strike. Additional exploration here is likely to result in additional U3O8 resources being identified.
- Significant portions of the current Triple R resources (the high-grade R1515W and R1620E zones) have yet to be incorporated into the mine plan, as laid out in the Feasibility Study. Resource conversion here could further extend mine life.
- The Feasibility Study also does not include much of the Inferred Resources for Triple R. Infill drilling could allow the upgrade of these U3O8 resources.
Tetra Tech Canada Inc., which conducted this study and compiled the results, did more than improve Project economics. The engineers have identified seven areas in which an improved mine plan can reduce the environmental impact of Patterson Lake South.
The timing of this news could not be better for investors. The “uranium breakout” that mining investors have been waiting for, for years has finally arrived.
What is driving this new, robust bull market for uranium? Nothing less than a doubling of the global nuclear industry.
The IAEA is forecasting a “doubling of nuclear capacity by 2050”. The realization has finally come (simply through crunching numbers) that global climate change goals cannot be met without a massive increase in nuclear power production.
In this Nuclear Renaissance, attitudes toward nuclear power have reversed (following Japan’s Fukushima disaster). Instead of being seen as “environmental threats,” nuclear power plants are increasingly viewed as “climate change solutions.”
FCU shareholders have benefitted from this new uranium bull market already. Fission Uranium’s current share price represents an increase of more than 500% from its March 2020 low.
But in our increasingly dysfunctional markets, FCU has actually pulled back by nearly 30% from its 52-week high. With the new, excellent numbers from the Feasibility Study now out, Fission has become an even more attractive prospect.
In this robust bull market, even companies with low-grade uranium projects have seen some strong gains. But the high grades of Patterson Lake South not only mean more upside potential. These grades also provide more downside protection should market conditions for uranium stocks (temporarily) reverse.
In today’s crazy markets, this will greatly increase investors’ comfort level in looking into Fission Uranium.
The new bull market for uranium is looking like a multi-decade investment opportunity. Fission Uranium’s Patterson Lake South Project is a premier, high-grade uranium project located in one of theworld’s best mining jurisdictions: Saskatchewan.
Shares in FCU are currently on sale!
DISCLOSURES:: This is a paid article by The Market Herald. The writer holds shares in Fission Uranium.