January 13, 2015, Uranium Investing News
A maiden resource estimate released on January 9 for Fission Uranium’s (TSX:FCU) Patterson Lake South (PLS) project in the Athabasca Basin has raised hopes about mining in the region and sent the company’s share price upwards.
Fission’s report highlights a resource of roughly 106 million pounds at what’s being called the Triple R deposit — significantly higher than most analysts estimated.
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“The entire deposit is located in basement rock, which is a preferred host rock for development of economic uranium deposits in the Athabasca Basin region. What’s more, the potential for continued growth is excellent and we plan to resume drilling later this month. All in all, these phenomenal results represent an incredible milestone for the team, the company and our shareholders,” said Ross McElroy, president, chief operating officer and chief geologist for Fission, in a statement.
Highlights include an indicated mineral resource of 79,610,000 pounds of U3O8 based on 2,291,000 tonnes at an average grade of 1.58 percent U3O8. A total of 75 percent of the resource falls in the indicated category.
“It totally beat all expectations. It beat ours, it beat the streets in terms of contained metal,” said David Sadowski, an analyst with Raymond James. “If you look at how high grade that core is, you’ve got 55 million pounds grading almost 20 percent uranium. That’s outstanding.”
David Talbot, an analyst with Dundee Capital Markets, commented similarly. ”There was a higher core than we anticipated,” he said. “I’m definitely pleased pleased by this high-grade core.”
Talbot did note that if the company focuses on maintaining the high-grade ore throughout wwwuction, it could require a high-grade mill, which in turn could require further environmental permits and construction.
The estimate has sent the company’s share price climbing. After closing Friday at $1.01 per share, Fission was trading at $1.13 by close of markets on Monday, marking a 9.71-percent climb for the Canadian company.
The news has also raised the profile of companies working in the western region of the Athabasca Basin.
“I think it certainly makes the west a lot more exciting. Cluff Lake was the only thing that had been mined in the west,” said Talbot, referencing the Cluff Lake project operated by AREVA (EPA:AREVA).
Sadowski echoed those thoughts, noting that the development could help kickstart investor interest in the region.
“It’s just great to have a story where a company so strongly outperforms and shows how prolific these Athabasca deposits can be,” he said.
Fission now has a “buy” rating from a series of analysts, including Talbot, Sadowski and Rob Chang with Cantor Fitzgerald. Sadowski has set a target price of $2.20, while Talbot has set a target price of $2.40 from an earlier target of $2.10. Chang has given the company a target price of $1.65.
Developments are expected to continue on the property, with Fission starting a $10-million drill program on Thursday.
The news also sent competitors’ share prices climbing, with Talbot pointing out that neighboring NexGen Energy (TSXV:NXE) saw a 4-percent increase in share price on Monday morning despite publishing no news.
Securities Disclosure: I, Nick Wells, hold no direct investment in any of the companies mentioned in this article.
Fission Releases PLS Resource: 79.6 Million Pounds Indicated, 25.9 Million Inferred