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Fission Energy: What the market is missing - Still more value when you consider the cash


January 17, 2013

Uranium

Fission Energy (TSXV: FIS, BUY Speculative)

Current Price: $0.76

Price Target: $0.90

Market Cap: $68.5M

What the market is missing - Still more value when you consider the cash

  • Fission Energy currently trades in the mid $0.70s, which is below fair value
  • The 0.355 DML share offer is currently worth $0.56/share to Fission shareholders based on a DML trading price of $1.57/share.
  • The value for Patterson Lake South, which will be spun off into a stub company can be implied from the enterprise value of Alpha Minerals (AMW: TSXV), which is the 50% owner of the PLS project.  Based on today’s trading, AMW has an enterprise value of $37.4M, or $0.26/share to Fission shareholders
  • Combined, the DML and PLS values equate to $0.81/share - $0.05 from where FIS is trading at now and a reasonable post deal announcement discount.
  • What the market is missing is the cash.  As stated in the transaction announcement, $18M in cash will be going to the stub company.  Based on the current FIS trading price, options and warrants that are in the money would add another $4.4M cash and inflate the share count to 145.2M shares or $0.15/share.
  • Moreover, the cash is protected since Denison is on the hook for all expenditures on properties that it is acquiring in the transaction.
  • Combined, Fission is worth $0.97/share based on current trading values. 

Fission Valuation based on recent trading prices for DML and AMW

Fission Valuation

Denison Shares

$0.56

per share

Patterson Lake South

$0.26

per share

Cash

$0.15

per share

Total

$0.97

per share

Source: Cantor Fitzgerald Research

 

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Rob Chang
Research Analyst, Metals & Mining

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