EDITOR: | April 1st, 2015 | 9 Comments

Fission Uranium: A financing, and possibly a family reunion

| April 01, 2015 | 9 Comments
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Twenty per cent of the world’s uranium comes from the Athabasca Basin in north Saskatchewan. In 2014, and again last week, we said that the Basin is in play. Quoting from last week’s article:

Watch for bloodshed as corporate and personal scores get settled in north Saskatchewan. Some of the juniors up that way, with weak assets and poor corporate governance and no ability to raise capital, don’t deserve to survive. There will be a consolidation play in the area, with one or two of the resulting players then being perfectly set up for takeout at a premium, so make sure your helmet is buckled and your mouthguard is in. Lawyers, proxy advisory firms and investment bankers could make their year-end bonus off the expected activity in the Basin. Points North Landing could become the next Fort McMurray.

Today we received more evidence. Fission Uranium Corp. announced a $15M flowthrough financing, and later this morning increased that to over $17M on strong demand. The financing will be cleared through a prospectus resulting in roughly 12 million free trading shares.

This is a bought deal, subject to regulatory approval, at a price per share of $1.50. Today’s market is in the $1.30 range, so the financing is at a premium of roughly 13%, not uncommon for flowthrough in a normal market, but in today’s punishing mining environment should be seen as a coup for the leadership team.

The underwriting group is broad, including BMO Capital Markets, Macquarie Capital Markets Canada Ltd., Raymond James Ltd. and TD Securities Inc. As a bought deal, the houses are showing extremely strong confidence inbeing able to sell the deal, and are risking their own house capital in doing so.

Clearly, Fission is getting VIP treatment, and looks like it is being targeted by the investment bankers as a consolidator of the weak sisters in the Basin. The investment bankers are showing much faith in the ability of Fission’s Chair, Dev Randhawa, to find, negotiate and close deals on other assets in the Basin. Don’t bet against him: Northern Miner Magazine named him ‘Mining Person of the Year 2013’ and Finance Monthly awarded him with their ‘Deal Maker of the Year 2013’ award.

And the company is strong in the field as well. Fission’s President, Ross McElroy, was the recipient of the Prospector and Developer’s Association’s prestigious Bill Dennis Award in 2013, recognizing Patterson Lake South as a significant mineral discovery in Canada.

A bit of history makes Fission’s press release more interesting: Denison Mines Corp. (TSX: DML, trading today around $1.00) has a long corporate story, making strong contributions historically to Canada’s economy with its uranium mine near Elliot Lake, Ontario. It was in production from 1957 to 1992. Currently it has interests in uranium properties in Mongolia, Zambia, Namibia, and of course in Canada in the Athabasca Basin.

As for its assets in the Basin, and quoting from Denison’s press release: Including the 60% owned Wheeler project, which hosts the high grade Phoenix uranium deposit, Denison’s exploration project portfolio consists of numerous projects covering over 467,000 hectares in the eastern Athabasca Basin region of Saskatchewan. Denison’s interests in Saskatchewan also include a 22.5% ownership interest in the McClean Lake joint venture, which includes several uranium deposits and the McClean Lake uranium mill, which is currently processing ore from the Cigar Lake mine under a toll milling agreement, plus a 25.17% interest in the Midwest deposit and a 60% interest in the J Zone deposit on the Waterbury Lake property.

Fission was birthed in early 2013 through a series of transactions, with Denison as one of its grandparents. With Fission being so prominently backed by the investment bankers, could a family reunion be in the works with Fission planning to make a play for Denison?

We’ve been saying this for months and will keep saying it. The Basin is in play. There will be a consolidator, leaving the door open for sovereign wealth from other nations or a much larger miner to buy the consolidator at a premium. Right now, Fission looks to be that winner.


Peter Clausi

Editor:

Mr. Clausi is an experienced investment banker, executive and director. A graduate of Osgoode Hall Law School called to Ontario's bar in 1990, Mr. Clausi ... <Read more about Peter Clausi>


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Comments

  • richard settducati

    very informative. Thank you

    April 1, 2015 - 1:23 PM

  • Goldprospector

    It’s only large, high grade Athabascan U deposits that matter, Clausi is probably right. Long FCU.

    April 2, 2015 - 6:05 AM

  • leewebb

    Doesn’t the fact that this was a flow-through financing require FCU to spend the proceeds on exploration costs, as opposed to buyouts?

    April 2, 2015 - 9:03 AM

  • Peter Clausi

    Leewebb, that’s correct if FCU were doing straight share buyouts of other companies. But raising flowthrough gives FCU another opportunity, which is to take control of the assets by way of joint ventures or option agreements. FCU can spend that FT money in the ground and control a large geographic area.

    April 2, 2015 - 12:53 PM

  • Rocky Malboa

    I still think it is undue attention on Athabaska at this stage of U price recovery. ISR projects look to be and proven to be most profitable in near to medium term and should carry the premiums…not conventionals or underground.

    Fission has always had attention. As time and circumstances change, it’s best we do too.

    You might want to go ‘long’ on fission…but it seems very ‘long’ to me. ISR’s should perform within 12 months.

    April 2, 2015 - 6:31 PM

  • leewebb

    Seems to me extraction cost of FCU’s deposit (high grade, shallow, huge volume) would be hard to beat. Big question is how much initial capex will be required to create a dam or birm in the lake. PEA will be very interesting.

    April 3, 2015 - 6:18 PM

  • Peter (the author)

    PEA’s and feasibiity studies are always interesting, both for the final numbers and the assumptions that go into them.

    April 4, 2015 - 8:38 AM

  • Updates on Clausi's Financings, Takeovers and Confusion | InvestorIntel

    […] Fission Uranium Corp. (TSCV:FCU) and the entire Athabasca Basin, from April 1, 2015. Still in play. Deals are being done, money is being raised, eyes are being set on prizes. Fission’s bought deal financing, originally announced at $15M, saw so much demand that it finally closed at over $20M. Expect more from the Basin and Fission. I’m still calling for Fission itself to be bought out within the year at a substantial win for its shareholders. […]

    April 30, 2015 - 11:37 AM

  • Bigger is Better: Fission Uranium Sold and the Athabasca Basin is in Play | InvestorIntel

    […] is in play, and Fission Uranium Corp. will be bought out within six months. See earlier articles here and here and here. Our investment thesis was this part of the world has too many junior companies […]

    July 7, 2015 - 11:58 AM

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