TORONTO (miningweekly.com) – Mighty oaks from little acorns grow, or so the saying goes. Having good ground is essential too and for many uranium juniors the best territory remains the Athabasca basin region, in northern Saskatchewan.
Fission Uranium is one such company, although its gaze is focused on the Athabasca basin’s western zones rather than the more traditional eastern areas.
Its recent progress has attracted a good deal of attention, further stoked by the announcement in late August that it intends to acquire the other 50% stake in its flagship Patterson Lake South (PLS) project currently held by Alpha Minerals.
“Two or three of [Alpha’s] main shareholders came to us and asked if we would be interested in initiating an acquisition. Firstly, they pointed out that [Alpha] was trading at a discount compared with Fission and that, secondly, we were far more liquid,” chairperson and CEO Dev Randhawa told Mining Weekly Online.
“The two companies would have been brought together at some point anyway, otherwise you would have had a major chasing two entities to conduct one deal,” he said, referring to the company’s ultimate objective: to make PLS an attractive acquisition target for a major uranium producer.
On September 3, Fission announced a refined deal with the acquisition to be made at $7.67 an Alpha share. The proposed transaction is set to be completed during November.
On completion, and pending shareholder and regulatory approval, a new entity under Fission’s auspices will be created to hold the 100% interest in PLS. Fission’s other assets will then be separately controlled by another, new vehicle.
GO WEST
All of this is somewhat striking when one considers that Fission Uranium came into being at the start of 2013. “But Fission has a longer history than most when they enter the sector,” Randhawa said, explaining that the company’s roots stretch back into the 1990s.
More immediately, Fission Uranium was spun out of Fission Energy after the latter’s eastern assets were sold to Denison Mines for $70-million. Fission Uranium kept the western properties.
“The western side of the Athabasca Basin is an underexplored region,” president and COO Ross McElroy told Mining Weekly Online. “The eastern side of the Basin has been the centre of attention over the past 30 years and there’s a good reason for this of course: Key Lake, Rabbit Lake and McArthur River etcetera are all located in here.”
However, there have been notable exceptions, including the Cluff Lake mine and the Shea Creek discovery.
“Cluff was one of the early deposits found [on the west side]. But people thought it was a geological one-off,” he said. “I was also involved in the Shea Creek discovery back in the early 90s, which is also on the west side. That project now has a 100-million pounds defined.”
“So between Shea and Cluff, the idea was fermented that the western side is every bit as prospective as the eastern side … I’m equally optimistic about significant deposits in the west as there are in the east and PLS is starting to show that be true,” he said.
“But it takes quite a bit of time to find targets,” Randhawa said. “We only initiated our first drill campaign at PLS starting November 2012. From this, we identified three zones after about nine weeks of drilling.”
WHAT LIES BENEATH
Fission’s latest exploratory campaign at PLS is still underway, with 44 holes to be drilled for 11 000 m at an investment of $7-million. The findings so far have been showing nearer-surface mineralisation. “We’re starting with mineralisation at 50 m to 60 m,” Randhawa said.
This presages an openpit operation, which will be a significant boon for any major seeking to acquire and initiate an operation at PLS, according to Randhawa. “An openpit allows a company to control production according to their requirements, something you can’t really do with an underground operation,” he said.
Initial returns from the drill holes have been encouraging, although most assay results have yet to be returned.
However, data released on September 4 for hole PLS13-075 caused something of a stir. Drilled in the western region of Zone R390E, the hole returned 9.08% triuranium octoxide (U3O8) from 61 m to 115.50 m. Within this was 21.76% U3O8 from 68.50 m to 90 m.
“This hole alone can add six-million pounds to eight-million pounds to your numbers. But what makes this really great is the shallowness,” Randhawa said.
Drilling will taper off by October. “We’ll probably stop drilling at the start of October and won’t resume for another three months. This will give us three months to step back and analyse the results more closely and then pick our next targets,” Randhawa added.
Fission also discovered a fourth zone of mineralisation at PLS in mid-August that has excited the company’s interest, although the ability to test this feature will depend on infrastructure, namely putting in place the barges required as drilling platforms.
“Our challenge is the barges as these take quite a long time to build. But we’ll certainly be poking around [the zone] in the near future,” Randhawa said.
In addition, Fission wants to further explore its other projects through the potential spinout company once the proposed transaction with Alpha is completed. This is particularly the case with its North Shore property, where Fission announced on August 29 that strong anomalies had been discovered by aerial survey work.
Randhawa is bullish about the future and not just for PLS but for uranium in general, citing macro factors that will support the sector, such as Japan bringing its reactor fleet back online and China’s new suite of reactors that will be built over the next ten years.
Finally, both McElroy and Randhawa were keen to stress the importance of Saskatchewan as a solid and stable jurisdiction. “The politicians here know that the uranium industry creates jobs … We’re very fortunate: for uranium, the stars align in Saskatchewan,” Randhawa said.