Fission Uranium (TSX: FCU) President Ross McElroy on Underground-Only PFS that Slashes CAPEX & Time to Construction and Enhances Economics at the PLS Property in the Athabasca Basin

September 25, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President, COO, and Chief Geologist for Fission Uranium (TSX: FCU)(OTC: FCUUF), Mr. Ross McElroy. Ross, how are you, sir?

Ross McElroy: Doing well, Gerardo. Thank you very much.

Gerardo Del Real: Well, congrats are in order. You just came out with your underground-only PFS results. Some main takeaways; reduced CAPEX, very, very strong operating on that front of it, and a minimized surface footprint, which obviously is important for several reasons. I'll let you give us a brief overview and then we'll dig into the details a bit.

Ross McElroy: You bet. I think you've hit on what I think are the key aspects of this pre-feasibility study. So it is an underground-only option. As you recall, we did the hybrid mine plan back in April where we discussed mostly an open-pit transitioning to underground.

So this one is strictly underground and really the benefits of it are a lot of savings in the CAPEX, about $300 million off of the CAPEX. That's a reduction of over 20%, so that is a huge amount. The economics are improved somewhat from the earlier pre-feasibility that we did in April as well. So that's key. I think what's nice is that it's a more simplified mine plan that has a shorter time to construction.

We think it'll be an easier proposition to make and so it's a win-win-win on all levels. I think we're pretty happy with the results of it. I think that the other benefit that we see, too, is that it's a mine plan to be able to readily access the other zones that are on strike of the main 780. So I think the whole package, I'm really quite happy with the results that we got.

Gerardo Del Real: I couldn't help but notice that there's a timeline reduction of one year, from four years to three years. That's important because we know that bull uranium markets are very violent to the upside, but they're also very cyclical. They come and they go, we get a good four- or five-, six-year run and then we know that it's likely going to be a round trip. So important to maximize the years that you're able to get out of a bull market. Would you agree with that?

Ross McElroy: I would, absolutely, I would agree with that. I think that if we can shave 25% off of the construction time in addition to the 21% reduction in CAPEX, these things are going to be huge improvements. And you're right, you want to be able to take advantage of the cycle as you're within it. So I think that a shorter construction time really does give us that advantage. So yes, I think those are very important points.

Gerardo Del Real: Pretax economics for this particular scenario, IRR of 34%, NPV at 8% of $1.33 billion, and payback in 2.2 years. What's next, Ross?

Ross McElroy: Yeah, Those are really good numbers, strong numbers. A quick payback is all because we're accessing the high-grade ore early on in the operation so the quick payback is a result of that.

What's next for us is that we're obviously have a path now towards feasibility. So that's going to take us about another 18 months or so from where we're at to complete feasibility. As part of that feasibility, I want a improved resource, a larger resource, and we can attain that by converting our inferred resources to indicated.

So there's plenty of inferred resource on the 780 and then on the satellite zones that are not even yet part of the mine plan. The 840 West, the 1550 West, and the 1620 East zones. Those are all essentially inferred and so they're not yet in the mine plan. So over the course of the next 8 to 9 months or so we hope to be able to convert the majority of our inferred resources. That's around 30 to 35 million pounds that we've outlined so far that hopefully we can convert into indicated and make an even more robust resource going into feasibility.

Gerardo Del Real: Fantastic. A lot to look forward to. I know it's been a tough summer moving into fall. I get the sense that this piece of news and the flexibility that you now have probably makes your strategic partner a lot more comfortable with the project. Would that be accurate?

Ross McElroy: I think it does, yeah. I mean, any time you can improve the economics to make things a bit simpler to deal with, reduce CAPEX over time, now that's going to make everybody happy.

The other thing is, too, we think we're seeing the beginning of a much stronger uranium market right now. You saw the World Nuclear Association's annual report being pretty strong and a lot more bullish than they've been in the past.

We think we're in the better part of the uranium market that will only get stronger and then, with the results of our pre-feasibility, I think the timing is perfect.

Gerardo Del Real: Excellent, Ross, thank you so much for your time. I know you're on the road in between planes, so thank you.

Ross McElroy: Very good, yeah. It's great talking to you and happy to update everybody. We're very pleased with the results. So thanks a lot.

Gerardo Del Real: Excellent, chat again soon. Take care.

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