Ross McElroy, P. GEOL. the President, COO, and Chief Geologist of Fission Uranium sits down with Proven & Probable to discuss their latest press release entitled: “Fission Increases Indicated Resource; Doubles Inferred Resource”, which addresses the Triple R Deposit located in the Athabasca of Canada. Mr. McElroy provides an update on the new Inferred and Indicted Resource numbers. In addition, the shareholders will receive an update on the Pre Feasibility Study. We also identify the value proposition for current and prospective shareholders that Fission Uranium presents to the market. With Uranium it’s not if, it’s a when, and if you have a when, you have a win proposition!
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Maurice Jackson:
Welcome to Proven and Probable where we focus on metals, mining, and more. I’m your host, Maurice Jackson. Today’s show is dedicated to speculators that wish to discern the value proposition for the world’s most awarded uranium explorer. I’m speaking of Fission Uranium trading on the TSX: symbol FCU, and on the OCTQX: symbol FCUUF.
Joining us for conversation is Ross McElroy. He’s the president, COO, and chief geologist for Fission Uranium. Before we begin, allow me to convey to our listeners that Fission Uranium is a sponsor of Proven and Probable. Mr. McElroy, welcome to the show, sir.
Ross McElroy:
Good day, Maurice. It’s great to talk to you.
Maurice Jackson:
Ross, we have some exciting news for shareholders. Let’s discuss the latest press release, entitled “Fission Increases Indicated Resource; Doubles Inferred Resource.” Please provide us with some specifics on this press release, as shareholders have been anxiously awaiting these results, sir.
Ross McElroy:
Sure. Well, we’re very pleased to put out our latest resource estimate on the PLS Project. What it essentially is, is the addition from the drilling in the last two years from 2016, 2017, that we’ve done on the PLS Project and that’s since our PEA update in September of 2015. Really, the focus over the last couple of years has been stepping outside of the Triple R deposit as we know it, on strike, and then we’ve made discoveries of new zones.
To the east, we had the R1620E high grade zone. To the west, along strike, we had two other zones that were on land. We had the 840 west zone and the more recent, 1515 west zone. So, with those we now have a sufficient number of holes that we start to get an appreciation for what kind of resource is in the holes. And that’s what the update was.
So we included those, there inferred pounds. Basically all three of those zones were high grade, and they provided, I think, significant increase to our inferred number of pounds in the overall resource estimate.
We also had a little bit of drilling that we had done in the R780 zone that was geared towards converting some of the inferred resources we had from previous estimates into indicated and also we found some more high grade, so we were able to boost up the indicated. It was really a win-win-win across the entire Patterson Lake trend that allowed us to basically have a significant increase primarily the inferred resource but also to the main 780 zone in the indicated category.
Maurice Jackson:
Ross for our listeners can you please share: what is the new indicated resource numbers and then also the inferred.
Ross McElroy:
Sure. Well the indicated numbers are now almost 87.8 million pounds of U308 and the inferred category is almost 53 million pounds of U308. So, just to step back just a second, the indicated basically we were able to grow that by 8%. The inferred category was almost a double. So we had about 27 million pounds from the previous estimate and that’s now, as I mentioned, close to 53 million pounds. I think what’s also good from my perspective as a geologist is seeing that the indicated and inferred grades are almost identical. That means that we have probably pretty good confidence in the grade of the inferred. When we see that those two numbers come close together, that’s positive. Quite often you’ll see inferred results at a quite different grade than the indicated. Indicated is a higher level of confidence, so if we can get the confidence of the inferred very close in grade to the indicated, that’s all good news. And that’s what we’ve been able to show on this project.
Maurice Jackson:
Now Ross can you also provide us with an update on the pre-feasibility study?
Ross McElroy:
Sure, the pre-feasibility is really taking the two zones that we had in the PEA, in the Preliminary Economic Assessment, back in September and moving them further towards hopefully an ultimate production decision. Those are the zones we have the most information, the most drilling. We’ve already done the first level of economics in the PEA. So now the pre-feasibility is the next step along that line and so we plan to have our PFS completed by the end of 2018.
The type of work that’s ongoing on the project right now, the work pre-feasibility, while we’re still finishing off some of the metallurgical work that we use in order to understand how well the uranium will process out of the ore. How easy the ore is to treat. We’ve seen positive results on every aspect of the metallurgy. It leaches out very well. It grinds well. We got very high recovery, almost 97/98%. We have very low detrimental elements mixed in with that ore. So in other words, arsenic is very low, almost negligible which is sometimes problematic for number deposits but not for the Triple R. So these are the sort of things that we’re trying to understand for the pre-feasibility.
Right now the winter program, Maurice, we’re doing a lot of geotechnical drilling. So we’re drilling around the perimeter of what we think will be the open pit wall so we understand we’re going to putting a slurry wall up there, a support wall, between Patterson Lake itself and the open pit mining in between. So we’re trying to understand all the properties that are necessary in order to build that dyke wall there. And also, just get some good rock understanding. The strength of the rock, which is necessary for both open pit and underground mining; which is in the overall mine plan.
So, that’s the big focus this year and once we collect all that data then the engineers can go back and re-crunch numbers and have a higher level of confidence. That’s what the pre-feasibility is all about as compared to say the initial stage PEA.
Maurice Jackson:
You know all of this is so exciting. Ross, let’s switch gears here for a moment. For our listeners, lets tie in the value proposition we have before us in Fission Uranium. I want to ask you a two fold question here. What is the current demand for uranium and what is the projected future demand for uranium?
Ross McElroy:
You know to look at the uranium sector, it’s really all about the growth of nuclear reactors. We see that, if you step back and look globally, it is definitely a growth industry.
You have China in particular, is the main growth engine. They’re building reactors at an incredible pace. They’re adding probably anywhere from between 8 to 10 reactors a year. I think, if that number continues to increase, China is ultimately, I’m sure they’ll have something north of 200 reactors by the time they’re done with their build up. What they’re really trying to do is step up on the electricity grid, to have nuclear provide at least 15% of the electricity would be generated by nuclear power plants, so that’s really what’s happening there. There’s other countries that are following similar suit. India is also on a major growth to get a lot of their electricity demand met by nuclear power as well. We’re seeing the same story unfold even in the Middle East, in Saudi Arabia, Untied Emirate, UAE already have operating nuclear reactors their building more. I see that the Saudi’s are about to break ground, so it is a growth industry.
It’s an interesting place that we’re in with the uranium sector because the price of the commodity has been low and has been low ever since really the Fukushima Event back in 2011. The price went down to where we’re at a low price in the commodity $20/$21/$22 on the spot price of uranium. And yet the demand is growing. So what’s happened is that the lowest cost producers out there, the Cameco and the Kazak operators are starting to curb production in a big, important, major way. What they’re trying to do is basically force the price of uranium up, so the utilities will be paying more for uranium because we all know that the lowest cost producers cannot really survive when uranium is at $20 a pound. It has to be something north of that, $30/$40/$50 are probably more realistic numbers for the lowest cost. That means for everybody else it’s even something higher than that.
So, we do think with that growth out there in the sector, the fact that the main producers are curbing their production. These will all tie into a much higher, stronger uranium price going forward. When that starts to take effect hopefully we’ll see some of that positive effect happen in 2018. I think there’s a good chance that we’ll start seeing the price creep up in the last half of this year, but even when we go forward over the next year or two I think we should see, the groundwork is set to see, some significant price increases in uranium. Which for anybody, like ourselves, people like to base us based on the price of uranium. They value the company and the product on that obviously.
As we continue to show growth in andde-risk with projects, move it closer to an ultimate production decision, we start seeing the price of uranium going up. We’re starting to get to a point where we in the near term future, we’ll say, where it’s look positive for companies like us on just about every level. We’re very pleased with where the sector is going. Now is the opportunity because the commodity is low therefore that continues to depress the share price but I think it won’t be too long before we start seeing at turnaround in this sector in a very important way.
Maurice Jackson:
You know, I’m delighted with the value preposition right now that Fission Uranium presents to the market. Global demand increasing, where does Fission Uranium fit into this pitch?
Ross McElroy:
Well fission uranium has its project in the Athabasca Basin is probably the premier area geologically for hosting uranium deposits. It has the highest grade deposits anywhere on the planet and importantly and maybe more so is the fact that this jurisdiction is the most favorable jurisdiction for uranium mining development. You’ve got a government that supports the industry and obviously the geological merits are there. So I think utilities are going to continue to come to the Athabasca Basin to look for projects.
So who do they look for? Well the PLS project and the Triple R deposit is really a standout project and it’s because the mineralization here is so shallow that it’s … What happens in mining districts is the more shallow the deposit is, the closer to the surface it is, the easier and less costly it is to develop. You can look at this project against any of the others in the Basin and it’s the largest, highest grade, near surface deposit out there.
This is the reason why we have a strategic partner in the Chinese. CGN is one major utilities in the world. They’re one of the two state owned utilities of China and they’re the ones that are building reactors as we talked about earlier. China is the growth engine. They’ve invested in this project. They have a 20% interest in the company because they looked at this project and saw that it was different then all the others. This is one that looks like it will take its rightful place in the hopper as far as projects for development in the future. I think people, investors, should follow the lead in what the Chinese utility have done. You’ll want to take a good hard look at the Triple R deposit on our PLS project and that’s what fission uranium has. We own 100% of that asset and in my opinion and that of many others, this is the best undeveloped uranium asset in the world.
Maurice Jackson:
I think we’re in agreement with that. You know with production cost well above the current spot price and the global demand is increasing I’ve been on record in previous interviews stating that, with regards to uranium, it’s not an if proposition, it’s a when proposition. And if you have a when proposition it will become a win proposition.
Now Ross I hope you don’t mind me sharing this, you and I have had a number of discussions offline at conferences and the common theme, not just from you but from everyone at the Fission Uranium Team, is the commitment to increasing shareholder value and you put that together with the fact that Fission Uranium, they’re good stewards of capital with proven management and an exceptional technical team. I’m always thoroughly impressed with Fission Uranium.
Ross McElroy:
Well I would agree with everything you said there. I think that our technical team is second to none. Our track record, it speaks for itself. This is our second major discovery of high grade uranium in the Athabasca Basin in about the last 7 or so years. PLS, we made the discovery back in the winter of 2012, really developed it over the next couple of years but that’s because we have a technical team that just really understood what the characteristics were all about. We were able to advance the exploration development really quite quickly. Faster than most projects.
And we have been very, very mindful. We have loyal shareholders, we have for a long time, they have let us know that in this top uranium sector that we need to watch our spending. We’ve taken that to heart. We’ve really decreased our spending in the last couple of years and yet we’ve still been able to advance the project. You saw the resource estimate that we put out yesterday. We are moving the project towards pre-feasibility. So we are still hitting all of the marks that we need to and yet being very careful on what we are spending because we obviously don’t want to go back to the market to raise more money when share prices are depressed because of a low uranium prices overall. We think that will change and when it does this will be a very healthy company with great supporters and, of course, the worlds best uranium project to go forward with.
Maurice Jackson:
All encouraging signs. Mr. McElroy, let me ask you a question here. What keeps you up at night that we don’t know about?
Ross McElroy:
For me, it’s the price of uranium. This is the thing that ultimately effects what the share price is and if you have a depressed price for a long time shareholders don’t see the increase in value of the shares even though we are increasing the value of the project level. So to me it’s a waiting game and I think you hit the nail on the head exactly right. It’s a matter of when not if when the sector changes. My biggest concern is trying to get a best reading on that when as possible and it’s difficult but we do know that it’s happening. I think if anything causes me to lose sleep on the most it really is factors that are outside of our control. Primarily, the price of uranium.
On the project level, I’m very comfortable with. On our rate of discovery, I’m very comfortable with. I think we’ve been able to stear this company quite well, navigating the conditions that we have in this sector that we’re in. So, that’s my biggest concern but I think it’s really just a question of when that corner turns and we don’t think it’s all that far out.
Maurice Jackson:
With regards to uranium and it being a win proposition I’m reminded of Rick Rule always stating “you must have courage and conviction” and I think those ethos fit perfectly here with the Fission Uranium story here. Last question for you sir. What did I forget to ask?
Ross McElroy:
Well, the one point I would bring up that we haven’t talked about yet is the PDAC Convention in Toronto at the beginning of March. That’s the world’s biggest congregation of people for mining conference anywhere. So to be proud sponsors of the PDAC we will be there in March and if any of the shareholders are around we encourage them to come by and meet us in person. We’re happy to give updates on where we’re at with the project and the overall sector. So come on out to PDAC and look us up.
Maurice Jackson:
Ross, if investors want to get more information regarding Fission Uranium please share contact details.
Ross McElroy:
Sure. Well I encourage investors to have a look at our website. It’s: www.fissionuranium.com. We’ve got a very comprehensive and up to date website so come on over and have a look. I think you’ll learn a lot about the company and about the project and even about the uranium sector itself.
Maurice Jackson:
And last but not least, please visit our website, www.provenandprobable.com where we interview the most respected names in the natural resource base. You may reach us at: Contact@provenandprobable.com.
Ross McElroy of Fission Uranium. Thank you for joining us today on Proven and Probable.
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Maurice Jackson
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