TORONTO (miningweekly.com) – Canadian Uranium junior Fission Energy has signed confidentiality agreements with “all the major players” in the Athabasca basin, president and COO Ross McElroy told Mining Weekly Online on Friday.

The companies are interested in Fission’s Waterbury Lake deposit, located next door to Hathor Exploration’s Roughrider project, which Rio Tinto bought for C$654-million earlier this month.

TSX-V-quoted Fission on January 16 announced an initial resource at the project’s J Zone deposit of 7.4-million pounds of uranium grading at 1.99% uranium.

That is slightly higher than the grade at Roughrider which McElroy said was about two years ahead of where Fission is currently.

“We know we’re a potential takeover target... the major companies will certainly be looking at Fission as the next in line,” he commented in a telephone interview.

Analysts have speculated that Rio Tinto would buy Fission, with Versant Partners’ Rob Chang repeating this belief on Friday.

“It is likely that the mining giant will look to acquire the high-grade, shallower mineralized deposit and land package immediately west of Roughrider,” he said in a note.

Fission’s J Zone is only 30 m away from Roughrider.

On Thursday, the Kelowna, British Columbia-based company announced it was increasing its 2012 exploration budget for Waterbury Lake by 26% to C$9.28-million to accelerate the programme.

Drills will now turn at several of Fission’s high-priority regional targets, including the Summit Zone, the Oban Corridor (Oban, Oban North and Chivas), and Murphy Lake, as well as at J Zone.

The reason for the spending rise was to allow the company to test the other promising targets while not slowing down at J Zone, McElroy said.

Because the J Zone is only 30 m from Roughrider, it is “one and the same deposit in geological terms”, and it is also shallower, likely making it cheaper to mine, he added.

It could also make more sense to access the Roughrider deposit through the J Zone.

“If you’re a mining company you want to develop the whole play,” said McElroy.

Approached for comment, a Rio Tinto spokesperson said the company did not comment on market speculation or rumours.

McElroy said Fission had not yet signed a confidentiality agreement with Rio Tinto.

Fission, which was spun out of Strathmore Minerals in 2007, has gained 11% on the TSX-V so far this year, closing at C$0.79 a share on Friday.

URANIUM PRICES

Meanwhile, McElroy said he was confident that prices for nuclear fuel would rise.

The Japanese nuclear disaster last March sent prices tumbling from nearly $70/lb to below $50/lb, though they have since stabilised at around $52.50/lb.

“We certainly believe in the strength of the sector. There is upward pressure on the price because of supply and demand issues have not gone away; they’ve just got closer in fact,” McElroy said.

An agreement between Russia and the US where uranium in former-Soviet Union warheads are downblended into fuel for power stations comes to an end in 2013, removing around 30-million pounds of supply.

Analysts have predicted strong price increases once this occurs.

McElroy said he believed uranium could reach $70/lb on the spot market this year.