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Fission Uranium: The Most Attractive Risk/Reward Proposition in the Entire Resource Sector?

June 21, 2016

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is President, COO, and Director of Fission Uranium, Ross McElroy. For those of you not familiar with Ross, he is a professional geologist with nearly 30 years of experience in the mining industry. Among his many accomplishments, he is the winner of the PDAC 2014 Bill Dennis Award for Exploration Success, and the Northern Miner Mining Person of the Year in 2013. Ross has held positions with both major and junior mining companies, which include BHP Billiton and Cameco. He headed up the technical team that made the discovery at Waterbury Lake, SK, and Fission Uranium's world class PLS, Patterson Lake South, discovery.

Patterson Lake South, or PLS as it's referred to, is host to the Triple R Deposit, which is arguably one of the most exciting discoveries across not just the uranium sector, but all commodities sectors in recent memory. It's also the largest PEA-backed undeveloped uranium deposit in Canada's Athabasca Basin District. Now, for those of you that aren't familiar with the Athabasca Basin, the basin is host to the richest producing uranium mines in the world. To top that off, the PLS project was recently rated as the number 1 undeveloped uranium project in the world by The Mining Journal, which is one of the mining industry's most read publications. Ross, thank you so much for joining us today.

Ross McElroy:  Thank you, Gerardo. It's a pleasure.

Gerardo Del Real: Fantastic. For those that aren't familiar with the story, with the Fission story, and the Patterson Lake South story, could you please share with us how the discovery was made?

Ross McElroy: Sure, I will. Probably just starting off broadly, most of the discoveries, and even the exploration efforts, have been on the eastern side of the Athabasca Basin. It's a very large geologic feature, and it covers most of northern Saskatchewan.

The biggest discoveries from the previous generation were all on the east side, and that's really where the Camecos of the world really focused a lot of attention. I decided that we wanted to look out in areas that were outside of that main district, so we went over on the western side of the basin, where very little historic work had been found. I mean, there has been uranium deposits in the past there, but not very many. AREVA had the Cluff Lake deposit out on the west end, but other than that, most people never really paid any attention to the west.

We went out looking where others hadn't been, and in fact, we looked outside of the basin margin. That was something really different, that hadn't been tried before. Part of that was, in my belief, was that the basin was a lot bigger at one time in geologic history, and so we were looking for where the basin used to be, not where it is right now. That's where we focused our attention. We flew an airborne radiometric survey with a new system that we helped developed with a fellow in Calgary. That led to the discovery of high-grade uranium boulders on surface at PLS.

After that, we applied a lot of outstanding, innovative geophysics techniques. We used new, evolving geologic models, tested radon in water in a way that hadn't been done before. The rest is history. That led to the discovery of very shallow, high-grade uranium in what we now call the Triple R Deposit.

Gerardo Del Real: Fantastic. Now, you mentioned the shallow and the high-grade nature of the deposit, and it's obviously world class, by every metric, but can you tell us a little bit more about the qualities that make it such a world class project and why it's so exciting?

Ross McElroy: Sure. I guess here's sort of what I look at, the keys to the deposit, that make it special and unique. As you already mentioned, the shallow depth. Our deposit starts at around 50 meters below the surface. That's extremely shallow by world's standards, and I think that one of the takeaways that investors should be aware of, in the world of mining, the shallow deposits are the ones that get developed first. It's basically the low-hanging fruit. Those will always be developed. Deeper deposits are more engineering hurdles, and the economics have to be even more robust the deeper you go. A shallow deposit gives you a real heads up, or leg up, on the competition right from the get-go. We have a shallow deposit. It's large. It's one of the largest in the Athabasca Basin, and typical to the Athabasca Basin, it's high-grade.

One of the features that we have, is basement mineralization. That's important, because the basement rocks, which sit below what people understand of the unconformity, and that's where the Cluff Lake and the McArthur River deposits are, great deposits, difficult to mine. We're in basement rock, which is much more competent rock, easier engineering. Really, all of the features of this deposit are unique, and in fact, there is no other high-grade, shallow, large deposit anywhere else in the world, so we have basically a one-of-a-kind deposit.

Gerardo Del Real: That's excellent, Ross. I personally believe that Fission offers one of the most compelling risk-reward propositions in the entire resource sector. I do feel, however, Ross, that because the project is already of such a size and grade, that it overshadows just how early stage the project is and the exploration upside that still exists. Now, Fission will be carrying out, if I'm not mistaken, a 52 hole drill program this summer, and that follows up a very successful winter program. Can you share with us a little bit about the success of the winter program, and what you hope to accomplish with the summer program that begins shortly?

Ross McElroy: You bet. The winter program was successful. We were able to expand our mineralized trend that hosts the Triple R Deposit in the middle, but we've extended the mineralized trend to 2.58 kilometers. Very large, in fact the largest footprint of all mineralized trends in the Athabasca Basin. We made discoveries on either end of that mineralized corridor this winter. On the west side, we discovered the R840W zone, and on the eastern side, we made the discovery of the R1620E zone, so both of those are high-grade, they're on trend to the main deposit, and hopefully they'll add significant new resource to the overall package. That's something that we'll pick up on in the summer program and continue to drill, further delineate, so that we can put a resource estimate on those brand new zones. Right now, the resource estimate and the PEA study are all on the two zones that currently make up the Triple R Deposit, the R00E and the R780E, so now we're expanding outwards into newly discovered zones, that we need to put sufficient holes in order to bring those into the resource estimate, grow the zone, and hopefully impact the economics, as well. That's one aspect of the summer program.

The other part, as you've just mentioned, is the fact that it is still early stage on the PLS project. We have over a 105 conductors. The conductors are primary exploration targets, where we hope to find high-grade uranium mineralization. There's over 105 of these conductors, that when you add them all up, it gives you about 200 miles of prospective trend for us to test yet on this PLS project. There's a lot of upside there, as well.

Part of the program, another dimension of the program, is moving some of the aspects, or the main part of the deposit, towards a pre-feasibility study aspect. With that, we'll do some geotechnical drilling, some hydrogeology drilling, things that we need answers to in order to further advance the economics towards pre-feasibility. It's really exploration, resource growth, and components to the pre-feasibility study that we'll be undertaking this summer. It really is an aggressive but very exciting program for us.

Gerardo Del Real: It sounds exciting, Ross. Obviously, you mentioned the drilling and you mentioned the pre-feasibility studies. What can shareholders expect during the second half of the year? Do we anticipate a new resource estimate by year end? Is that a possibility?

Ross McElroy: I don't think we'll have a new resource estimate in 2016. I'm projecting more towards mid-2017. The reason being ... It's a good reason, because with the discoveries of these 2 new zones, the 840W and the 1620E zones, we need to further drill that, and that's what we'll be doing this summer and probably into next winter, too, so more holes will give us, hopefully, more mineralization that we'll be able to build into a bigger resource. Until we have a better understanding of those 2 zones, and maybe even new discoveries that are yet to come, we probably won't do a resource estimate until we have a handle on that. I think that'll come in 2017. Investors will be able to expect our constant flow of news from drilling ... Every season, so far, in the last 4 years on this project, we've been able to expand, and grow, and basically upgrade this project, and we expect that this summer will be no different. We're looking for good, positive things to come out of the summer program.

Gerardo Del Real: Absolutely. Earlier in our conversation, you mentioned the proprietary technology that Fission has at its disposal, and I think that that's contributed to the very high hit rate. What's been the hit rate so far? Do you know the exact number, Ross? I remember at one point it was in the high 80s, low 90%. Are you still trending that high or in that range?

Ross McElroy: We really are. When we talk about drilling within the zone and along that mineralized trend, we are probably 85 to 90% hit rate, which is phenomenal by any standard.

Gerardo Del Real: That's incredible.

Ross McElroy: Oh, it absolutely is. Not only that, that's what's also led to us quickly being able to include a large percentage of our resource estimate into the indicated categories on the Triple R Deposit, so indicated means that you can move towards economic studies, that the lower category inferred is basically ... requires more drilling to get it to indicated, to go to economics. That's something that we've been able to do because of the incredible hit rate success and the tight drilling spaces that we've had, so it's a continuous ore body, is what it boils down to. That's why the hit rate is as successful as it is, and why the economics are where they are.

Gerardo Del Real: That's fantastic, Ross. Now, the drill program starts ... Is it the first week or the second week of July? Am I correct?

Ross McElroy: Yeah. We're looking at early July for the drill starting. It's going to be a busy time up in northern Saskatchewan for us on the PLS project, with news flow probably expected around mid-July, so the drilling starting the first week, hopefully get a few holes under our belt by the mid-July, and say third week, we'll be able to start putting out some news for the public.

Gerardo Del Real: Wow. Ross, we can't wait. It's exciting to have you back out there exploring, and adding, and growing the current resource. Thank you so much for your time. I'm looking forward to having you back on as soon as the summer program advances. Is there anything else that you'd like to share with us, Ross?

Ross McElroy: Well, Gerardo, I do appreciate the opportunity to present the PLS Project to you and to your readers and subscribers, all the investors. We're very excited about this project. It is one-of-a-kind, and we would like people to stay tuned and stay focused on the PLS Project and Fission Uranium Corp, so thank you very much for the opportunity.

Gerardo Del Real: Ross, thank you for your time. We'll have you back on soon and hopefully share a lot of good news.

Ross McElroy: Good. Thank you very much.

Gerardo Del Real: Take care.

Ross McElroy: Take care.

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