Fission shaves capex, construction time at PLS

Fission Uranium (TSX: FCU; US-OTC: FCUUF) has released an updated prefeasibility study for an underground-only mine at its 100%-owned Patterson Lake South uranium project in northwestern Saskatchewan. The updated prefeasibility follows an earlier study of an open-pit and underground operation released in April.

The latest prefeasibility study tables a 1,000-tonne-per-day underground mine that will process 2.3 million tonnes grading 1.61% uranium oxide (U3O8) for 81.4 million lb. of uranium oxide over its seven-year mine life at average unit operating costs of US$7.18 per lb. of U3O8.

It forecasts an after-tax net present value of $702 million at an 8% discount rate, and an after-tax internal rate of return of 25%. This is an improvement over the hybrid study, which tabled an after-tax NPV of $693 million at an 8% discount rate and an after-tax IRR of 21%.

The change from an open pit and underground mine to an underground-only operation is also expected to yield a 21% reduction in initial capex from $1.5 billion to $1.18 billion and shaves the construction timeline from four to three years. The payback period is 2.5 years.

The lower capex and shorter construction time is attributed to simplified water-control measures, the company says. The revised mining method eliminates the need for a system of dykes and slurry walls, dewatering and overburden removal, which will result in a 90% reduction of total mine-related earth movement to 5.4 million tonnes — down from 51.2 million tonnes in the previous prefeasibility study and a 58% reduction in disturbed area.

The company’s 310 sq. km PLS project, 550 km northwest of the city of Prince Albert and 150 km north of the community of La Loche, is home to the world’s richest uranium mines.

Geologist Ross McElroy at Fission Uranium’s Patterson Lake South uranium project in northern Saskatchewan. Credit: Ironside Resources.

Fission Uranium president and chief operating officer Ross McElroy at the Patterson Lake South uranium project in northern Saskatchewan. Credit: Ironside Resources.

Ross McElroy, Fission’s president and chief operating officer, says the company had initially looked at mining the shallow deposit as an open pit. “Normally when the deposit is 50 metres below the surface, an open pit is your preferred method to get to it. And it showed a very viable and attractive scenario,” McElroy says.

But the open-pit mining option would involve a high-capital requirement of building a berm wall around the deposit as two of the five mineralized zones — the R780E and R1620E zones that make up the eastern region of the Triple R deposit — are located beneath Patterson Lake, where the water depth is generally less than 6 metres and overburden thickness is 50 metres.

“Because you have a lake sitting there, the Patterson Lake itself, you would have had to build a berm wall around the deposit, which is certainly technically viable and it has been done many times on several deposits in northern Canada,” McElroy says. “But it is expensive.”

As a result, the company looked at the alternative of mining the deposit through an underground mine while it was completing the PFS on the open pit.

“What it showed is we would save a significant amount of capital of at least $300 million dollars or more,” McElroy says of the underground-only option. “I’m 95% confident that the underground-only option is the way to go forward.”

The uranium project hosts the Triple R deposit, which consist of five mineralized bodies — R1515W, R840W, R00E, R780E and R1620E — spread across a 3.2 km mineralized trend on the southwestern end of Saskatchewan’s Athabasca basin. Mineralization at PLS occurs along steeply dipping structures and is often associated with graphitic material. The deposit sits 50 metres below the surface and remains open in several directions.

In 2009, the company ran a high-resolution, airborne radiometric and magnetic survey that detected a radioactive anomaly 3 km west of Patterson Lake, in a new area. Fission discovered a high-grade, uranium boulder field through follow-up work on the anomaly. Through drilling, it traced the anomaly back to the west shore of Patterson Lake. It drilled the discovery hole, announced on Nov. 5, 2012, in what is now called the R00E zone.

“When we made the discovery back in 2012, it was in an area that nobody even looked at. That is why we were able to beat the big guys at the game,” says McElroy. “We really did open up a very important part of the Athabasca Basin,” he adds. “The future of uranium mining in Saskatchewan will come out of this area.”

Since then, the project has grown considerably and its 17 mineral claims now comprises five mineralized zones that make up the Triple R deposit.

R1515W covers 90 metres in strike length, 68 metres across strike and 220 metres vertical. Mineralization remains open in several directions. R840W is located 515 metres east along strike of R1515W and has a strike length of 430 metres. R00E is located 485 metres east along strike of R840W and is drill defined to 115 metres in strike length. The R780E zone and R1620E zones, located beneath Patterson Lake, make up the eastern region of the Triple R deposit. R780E, the biggest zone, is located 225 metres east of R00E and has a strike length of 945 metres. R1620E is located 210 metres along strike to the east of R780E, and is drill defined to 185 metres in strike length.

The mineral resources in the updated study remain unchanged from the previous one. The PLS project contains 2.22 million indicated tonnes grading 2.1% U3O8 for 102.4 million contained lb. U3O8. Inferred resources add 1.22 million tonnes grading 1.22% U3O8 for 32.8 million contained lb. Resources are based on a cut-off grade of 0.25% U3O8.

Drill core on display at Fission Uranium’s Patterson Lake South property near the Athabasca basin in northern Saskatchewan. Photo by Richard Quarisa.

Drill core on display at Fission Uranium’s Patterson Lake South property near the Athabasca basin in northern Saskatchewan. Photo by Richard Quarisa.

Fission plans to complete a feasibility study along with an updated resource estimate, by December 2020.

Also in the pipeline is a 90-hole, 28,000-metre drilling program scheduled to begin in December until July 2020 to expand and convert the resources in the three mineralized zones — R1515W, R845W and R1620E — from the inferred to indicated category.

The underground PFS is based on indicated resources from R780E and R00E zones only, although provisions have been made for the project to accommodate additional resources from the other three zones.

“If we are able to convert everything that we know, we roughly get about another 35% of the resource,” McElroy says.

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