Fission Uranium is a BUY - FCU offers the best value in the massive PLS uranium deposits in the Western Athabasca Basin.
Fission Uranium Corp.
FCUUF: Price: $0.45; Market Cap (M): $307
Rating: Buy; Price Target: $1.70
Heiko F. Ihle, CFA
Marcus Giannini
Site Visit Provides View Into Progress at PLS; Firm Remains Focused on FS; Impressive Display of Core; Reiterate Buy Click here for complete report and disclosures Site visit to Fission’s Patterson Lake South (PLS) project. On July 11, 2022, we attended a group analyst site visit to the PLS project located in the Athabasca Basin of Saskatchewan, Canada. Notably, this trip represents our first site visit to PLS since 2017, and the company has made meaningful progress at site since then. The logistics regarding travel and arrival at site remained quite straightforward: we arrived in Fort McMurray on July 10, 2022, followed by a 45-minute floatplane flight to PLS the next day. In short, while Fission maintains limited staff at site due to a lack of active drilling, the company continues to make meaningful progress towards publication of a Feasibility Study (FS) for PLS, which should provide significant and near-term project de-risking.
Site visit highlights include core presentation. Fission currently maintains nearly all the core from past drill campaigns at site, with about 700 holes drilled to date. In addition to walking through the stacks of historic core, we were given the chance to see a variety of select drill hole intervals, giving us a first-hand look into the high-grade nature of ore within the deposits at the project. Fission laid out hole PLS-18-558, which illustrated the high-grade uranium (U3O8) potential over a continuous 50.5 meter (m) interval, as we discuss later in this report. In short, these tours remain invaluable, as we were able to see the extent of uranium mineralization in person, adding yet another layer of due diligence towards our view of PLS as an economical deposit.
Inflationary pressures likely to be reflected in the upcoming FS. We expect inflation to make an appearance in the PLS project’s pending FS. We note that the company published a Pre-Feasibility Study (PFS) for PLS in September 2019 before recent inflation really took off. We therefore expect costs in the FS to outpace those used in the previous study. While increased costs are now essentially commonplace for miners of any commodity, we emphasize that a spike in uranium pricing since the company’s PFS should help offset some of these metrics.
We are reiterating our Buy rating and our PT of $1.70. Our valuation remains based on an unchanged DCF of operations at PLS, utilizing a 9.0% discount rate, and our unchanged long-term uranium price estimate of $65.00/lb, or about C$84.42/lb, beginning in 2029. We then add cash and short-term investments, as well as the 32.8Mlbs of Fission's additional uranium resource at an unchanged average value of $8.50/lb, to calculate our NAV for the company.
Near-term catalysts. We view Fission’s publication of the previously mentioned FS, which could see completion by the end of the year, as the company's most significant catalyst. Additionally, we anticipate management to continue its open dialogue with local indigenous rights holders and stakeholders amid ongoing permitting and regulatory work. Looking out to 2023, Fission currently anticipates the completion of an Environmental Impact Assessment (EIA) for PLS. In conclusion, and as reiterated by our recent site visit, we believe PLS continues to prove its economic viability, especially given strength in uranium prices.
Risks. (1) Uranium price risk; (2) financing risk; (3) political risk; and (4) operating and technical risk.
Heiko F. Ihle, CFA
212-356-0510
hihle@hcwresearch.com
Marcus Giannini
212-916-3978
mgiannini@hcwresearch.com
IWA is a shareholder of Fission Uranium Corp
Statements which are not purely historical are forward-looking statements, including any statements regarding beliefs, plans, expectations, or intentions regarding the future. It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Risks and uncertainties include, but are not limited to, economic, competitive, governmental, environmental, and technological factors that may affect the Company’s operations, markets, products, and prices. Readers should refer to the risk disclosures outlined in the Company’s Management Discussion and Analysis of its audited financial statements filed with the British Columbia Securities Commission.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
