Fission’s Ross McElroy on how “we are in the early stages of a uranium bull market”

InvestorIntel’s Tracy Weslosky spoke with Ross McElroy, President & CEO of Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF), about the uranium market and the competitive advantages of Fission’s Triple R uranium deposit.

“We do think that we are in the early stages of a uranium bull market,” Ross said. “The longer we have increased demand, we will see restrictions in the supply, it will continue to drive the price of uranium up and there has been nothing but closures of uranium mines around the world.”

“The recognition is there that nuclear power is a clean energy,” Ross added. “Nuclear makes up over 15% of the United States’ electrical needs and I think that will continue.” He further commented, “Fission Uranium has the world’s best large, high-grade shallow deposit that is in Saskatchewan. Saskatchewan is recognized as one of the top jurisdictions worldwide for mining investment.”

To access the complete interview, click here

Disclaimer: Fission Uranium Corp. is an advertorial member of InvestorIntel Corp.




Dev Randhawa on the uranium market and Fission’s US$10 million credit facility with Sprott

“The spot price has shot up and reason the spot price has shot up is that for too long utilities have been counting on the short term market for their supply of uranium and suddenly with closures at Cigar Lake, in Africa, and we might see more, 54% of world’s supply disappeared overnight.” States Dev Randhawa, Chairman and CEO of Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF), in an interview with InvestorIntel’s Tracy Weslosky.

Dev went on to provide an update on Fission’s US$10 million credit facility with Sprott. Dev said, “We are very excited to have Sprott onside. Not will it just give us a bigger runway to see what happens with spot price but also have support of the likes of Rick Rule in the open market to the wisdom of Peter Grosskopf…This is very smart money, very intellegent money who have all sorts of arms to help you move forward in your corporate plans.”

Fission’s Triple R Project is located in the Athabasca Basin region in Saskatchewan, which is one the best jurisdictions in the world to have a mining project. Dev said, “You cannot put a price on jurisdiction. Just ask some people who had their mines taken…All of Canada’s uranium comes from one spot which is the Athabasca. They have got 60 years of mining experience…They want the industry so they work with you.”

To access the complete interview, click here

Disclaimer: Fission Uranium Corp. is an advertorial member of InvestorIntel Corp.




The DoE’s plan to rebuild the uranium sector and “pull America’s nuclear industrial base back from the brink of collapse…”

The United States Nuclear Fuel Working Group (NFWG), via the US Department of Energy, released its report yesterday which gave glowing recommendations to rebuild the US uranium and nuclear energy sector. This is great news for the entire US uranium and nuclear sector, and particularly for US uranium miners. The title and contents of the report show the US Government’s strong commitment to rebuild the sector and make ‘it great again’.

US Dept. of Energy – “Restoring America’s Competitive Nuclear Energy Advantage”

The report summary states:

“As an initial and important step, the President’s Fiscal Year 2021 Budget Request for the Department of Energy includes $150 million to stand up a domestic Uranium Reserve. It will begin with the purchase of uranium from U.S. mines and of U.S. conversion services.”

The full NFWG report states:

  • “First, the U.S. Government will take bold action to revive and strengthen the uranium mining industry, support uranium conversion services, end reliance on foreign uranium enrichment capabilities, and sustain the current fleet, removing strategic vulnerabilities across the nuclear fuel cycle and restoring a world-class workforce to provide benefits to the U.S. and to compete in the international market.
  • Next, the U.S. Government will leverage American technological innovation and advanced nuclear Research, Development, and Demonstration (RD&D) investments to accelerate technical advances and regain American nuclear energy leadership.
  • Finally, the U.S. Government will move into markets currently dominated by Russian and Chinese State Owned Enterprises (SOE) and recover our position as the world leader in exporting best-in-class nuclear energy technology, and with it, strong non-proliferation standards. We will restore American nuclear credibility and demonstrate American commitment to competing in contested markets and repositioning America as the responsible nuclear energy partner of choice.”

It is within our power to pull America’s nuclear industrial base back from the brink of collapse and restore our place as the global leader in nuclear technology – ensuring a strong national security position and buttressing our economic strength for generations.”

The report recommends to “provide immediate action to support US uranium mining”

Quoted from the full NFWG report:

  • “The Administration supports actions associated with the timeline that will provide funding for a competitive procurement for U.S. uranium mining, conversion services, in the very near term, as reflected in the Fiscal Year (FY) 2021 President’s Budget, and will also consider enrichment needs after first addressing the existing pressure on the uranium mining sector. The Department of Energy believes that a 10-year timeline reflects a responsible approach to addressing the challenges facing the front-end of the fuel cycle……
  • As included in the President’s Fiscal Year 2021 Budget Request, during the first year, it is expected that the reserve would directly support the operation of at least two U.S. uranium mines and the reestablishment of active domestic conversion capabilities……
  • Support Department of Commerce (DOC) efforts to extend the Russian Suspension Agreement (RSA) to protect against future uranium dumping in the U.S. market. Since 1992 DOC has upheld the need for a Suspension Agreement that establishes a maximum cap for imports of Russian uranium to 20% of the U.S. market to reduce the impact of Russia’s unfair trade practices. DOC is again reviewing the RSA for possible extension upon the expiration of the current agreement in 2020. The Working Group supports the extension of the RSA beyond 2020 and the consideration of further lowering the cap on Russian imports under future RSA terms.
  • Enable Nuclear Regulatory Commission (NRC) to deny imports of nuclear fuel fabricated in Russia or China for national security purposes.”

Potential expansion of the currently proposed uranium reserve

The full NFWG report also states:

“A decision to expand the currently proposed uranium reserve will be made based on a variety of factors, including cost, impact, need, and on-the-ground conditions. The ultimate goal of the Administration’s actions is to create an appropriate safeguard for the United States and our allies against unfair market intervention by foreign states or other disruption and provide a source of unobligated uranium for strategic purposes in a manner that is in the best interest of the taxpayer. Any potential expansion of the currently proposed uranium reserve to include enriched uranium or an expansion of the AAFS (American Assured Fuel Supply) could require the procurement of the equivalent of about 24 additional large light-water reactor reloads of enriched uranium, with the following estimated scale of services to be procured and commencement dates:

  • Mined and milled uranium estimated between 17 and 19 million pounds in the form of U3O8, beginning in 2020;
  • Domestic conversion services resulting in about 6,000 to 7,500 tons of UF6, beginning no later than 2022; and
  • Domestic enrichment services beginning possibly in the 2023 timeframe, of which 25% would be unobligated. However, no commitment has been made to take action beyond the Uranium Reserve proposed in the FY21 Budget, which addresses the sectors most imminently at risk.”

The US uranium sector is set to rise again

Closing remarks

The NFWG/Department of Energy’s report officially confirms some of what was previously reported, with the title saying it all – “Restoring America’s Competitive Nuclear Energy Advantage.”

For the US uranium miners the US$150 million US uranium reserve was confirmed to “directly support the operation of at least two U.S. uranium mines and the reestablishment of active domestic conversion capabilities.” The US uranium sector should get a significant boost from this great news.

Looking at the main US uranium miners Energy Fuels Inc. (NYSE: UUUU | TSX: EFR) and UR-Energy Inc. (NYSE: URG | TSX:URE), they stand to be the major beneficiaries, especially given they started the whole S232 petition back in January 2018. Others in the sector may also do well, include Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF) and Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF).




Fission Uranium stock climbs 78% as uranium prices skyrocket the past 3 weeks

With all the media attention focused on COVID-19 (coronavirus), it is easy to have missed what has happened to uranium. The uranium price has skyrocketed the past 3 weeks up about 20% from the mid-March lows, Dev Randhawa commented that perhaps we may credit the interest to the fact that 54% of the U.S. monthly uranium supply has gone off line due to the COVID-19 crisis.

Uranium prices have skyrocketed higher the past 3 weeks – Uranium – US$ 28.70/lb

Source

One uranium miner that has spiked ~78% higher the past two weeks is Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF). Fission is a Canadian company with an exciting uranium project in the Athabasca Basin of Saskatchewan, Canada.

The Athabasca Basin is a region in the Canadian Shield of northern Saskatchewan and Alberta Canada. It is best known as the world’s leading source of high-grade uranium and currently supplies about 20% of the world’s uranium.

Fission Uranium Corp.

Fission Uranium Corp. owns the award winning, high-grade, and near-surface Triple R uranium deposit on its 100% owned Patterson Lake South (PLS) property, located in Canada’s Athabasca Basin, home to the world’s richest uranium mines.

The Company has the strategic backing of China’s CGN Mining, which has invested over $82 million in Fission, at a substantial premium, in early 2016.

Patterson Lake South (PLS) property

The PLS property comprises 17 mineral claims totaling 31,039 ha located on the southwest margin of the Athabasca Basin. The property is accessible by all-weather Highway 955 which runs right through the middle of the property.

The Patterson Lake South (PLS) property is situated in the high uranium grade Athabasca Basin region in Canada

The Triple R Deposit (the main deposit so far discovered on the PLS property)

The Triple R deposit is the most significant high-grade, near-surface project in the region. Fission has also discovered two other major, high-grade zones and has outlined the largest mineralized trend in the region.

Actually the Triple R Deposit is made up of not 3, but 5, mineralized uranium deposits.

Fission Uranium’s Triple R Deposit and uranium Resource estimate

The Triple R Resource estimate

The Triple R Resource estimate is as follows:

  • 102,360,000 lbs. U3O8 Indicated Mineral Resource, based on 2,216,000 tonnes at an average grade of 2.10% U3O8.
  • 32,810,000 lbs. U3O8 Inferred Mineral Resource, based on 1,221,000 tonnes at an average grade of 1.22% U3O8.

The Triple R deposit remains open, and the PLS property has untapped exploration potential as ~80% of the property is yet to be explored.

The Company states:

“The Triple R deposit is the only high-grade deposit in the entire Athabasca Basin region with substantial high-grade mineralization starting just 50m from surface. The deposit, which is part of a 3.18km mineralized trend at PLS, remains open in several directions.”

The Triple R Deposit, underground mine plan

Source

The Triple R Pre-Feasibility Study (PFS) results

In 2019, the Company released results of two PFS studies. The results are highlighted below.

  • Hybrid approach (Open pit & underground) PFS – Post-tax NPV8% of C$693 million, post-tax IRR of 21%, initial CapEx of C$1,499 million. Operating costs were estimated at C$9.03/lb U3O8 over an 8.2 year mine life.
  • Underground-only mine PFS – Post-tax NPV8% of C$702 million, post-tax IRR of 25%, initial CapEx of C$1,177 million. Operating costs were estimated at C$9.57/lb U3O8 over a 7 year mine life.

The Company stated:

“Both studies presented strong results, including low OpEx, fast payback and strong IRR, which highlight the potential for highly economic production at PLS. While both options remain viable, the upcoming Feasibility Study will focus on the best option, most likely the underground only scenario.”

My view is that if the Company can successfully grow the resource further which appears highly likely; then the NPV can substantially improve as the mine life would be extended out towards 20 years plus. In that case, the large upfront CapEx will become less of an obstacle towards project funding.

Latest News

  • Fission announces the closing of a US$10 million credit facility with Sprott. Fission will use the proceeds from the Facility to fund development of the Patterson Lake South uranium project (the “Project”) and for general working capital purposes. In connection with the Facility, Fission has agreed to issue 20,666,667 common share purchase warrants (“Warrants”) to Sprott and its affiliates at an exercise price equivalent to C$0.17. The credit facility is US$10 million at 10% for 4 years.

Next steps

Fission will soon begin work on the Environmental Assessment (“EA”) phase for its’ PLS property, as well as a Feasibility Study as discussed above.

Closing remarks

Fission Uranium has a high grade, shallow, and large uranium resource at the Triple R deposit on its PLS property in Northern Canada. The Indicated Resource is 102,360,000 lbs. of U3O8 at 2.10% U3O8, plus 32,810,000 lbs. of U3O8 Inferred at 1.22% U3O8. This alone is impressive; however represents less than ~80% of the property which is yet to be explored. Meaning there is very significant exploration upside.

The 2019 PFS results were solid, but a higher NPV and a lower CapEx would make the project more appealing. Usually this is achieved as mining companies further grow their resource and progress towards funding.




Trump allocates $150 million per annum to establish U.S. uranium reserve

In breaking news the US Government has just released its FY2021 budget document to go forward for approval to the US Congress.

It appears that the Nuclear Fuel Working Group’s (NFWG) recommendations to support the US uranium industry have been supported, at least to the tune of a US uranium reserve per annum of US$150 million over 10 years: a $1.5 billion plan to establish a U.S. uranium reserve.

Some key points from the FY2021 US budget document are quoted below from pages 45-47:

  • “Nuclear energy is also critical to the Nation’s energy mix and the Budget supports an array of programs to advance nuclear energy technologies. This portfolio promotes revitalization of the domestic industry and the ability of domestic technologies to compete abroad. The Budget provides $1.2 billion for R&D and other important nuclear energy programs, including nearly $300 million for the construction of the Versatile Test reactor—a first of its kind fast reactor that would help the private sector develop and demonstrate new technologies.
  • Supports Nuclear Fuel Cycle Capabilities. On July 12, 2019, the President determined that “…the United States uranium industry faces significant challenges in producing uranium domestically and that this is an issue of national security.” The Budget establishes a Uranium reserve for the United States to provide additional assurances of availability of uranium in the event of a market disruption.”

Furthermore, the uranium reserve amounts are shown below, with US$150 million pa allocated for a “uranium reserve” for “purchase of uranium” each year from 2021 to 2030, as well as other discretionary funds.

Source: Page 127

Detailed view for FY 2021 US uranium reserve funding budget

Source: Page 397

A response from the Department of Energy’s Office of Nuclear Energy to the uranium reserve proposal

The Office of Nuclear Energy (NE) stated:

“NE is asking for $150 million to set up a uranium reserve to further protect the nation’s energy security interests. The new program will help to reestablish the nation’s nuclear fuel supply chain through the domestic production and conversion of uranium. The reserve is expected to support the operation of at least two U.S. uranium mines and will ensure there is a backup supply of uranium in the event of a significant market disruption that prevents entities from acquiring fuel. NE would begin the procurement process for the reserve in FY21.”

The “at least two US uranium mines” would suggest the two that brought forward the original Section 232 petitionEnergy Fuels Inc. (TSX: EFR | NYSE American: UUUU) and Ur‐Energy Inc. (NYSE: URG | TSX: URE).

Ur-Energy Inc.’s Chairman, President and CEO Jeff Klenda added: “After years of sounding the alarm, Ur-Energy is pleased the Trump Administration has recognized the national security implications of ceding the nuclear fuel cycle to our geopolitical rivals and is now taking definitive action to shore up the domestic industry by establishing a national uranium reserve that will be supplied by domestically-mined uranium. The President’s proposed budget includes up to $150M per year from 2021 through 2030 to purchase domestic uranium. According to today’s issue of The Energy Daily DOE Undersecretary Mark Menezes commented on Monday that, “This is the beginning of a long process” to address the nuclear fuel cycle. “It won’t stop with the creation of the uranium reserve.”

Curtis Moore, VP Marketing and Corp Development from Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) commented: “Now that we’ve had a day or so to digest yesterday’s budget news, we are increasingly optimistic about what it all means for Energy Fuels.  The Office of Nuclear Energy within the U.S. Department of Energy stated that this money is ‘expected to support the operation of at least two U.S. uranium mines …’ There are currently only three or four uranium facilities operating in the U.S. right now, that have the current capability to supply a U.S. uranium reserve, including Energy Fuels’ White Mesa Mill in Utah and our Nichols Ranch ISR Facility in Wyoming.  So, at the very least, we think this money should go toward supporting these existing, proven, low-cost facilities and saving existing jobs and expertise.

In addition, Energy Secretary Dan Brouillette and others have stated that the Nuclear Fuel Working Group will announce more recommendations in the coming weeks. It is our belief that yesterday’s announcement will support sustainable domestic uranium production of about 2-2.5 million pounds per year.  However, if the U.S. wants to have an industry capable of supplying 5-10 million pounds per year, additional actions are required. The U.S. consumes about 48 million of uranium per year, not including military requirements. So, 2-2.5 million pounds only represents a tiny fraction of total U.S. demand; even 5-10 million pounds isn’t much. So, we are interested to see what else the government has in mind.  Indeed, government officials, including Wyoming Senator John Barrasso, who has been a staunch defender of President Trump, are calling for the government to do more. And, as an American, I’d like to see the government do more.

Finally, yesterday’s announcements clearly indicate that nuclear fuel has become a major priority for the U.S. government. It is our belief that no matter which political party leads the U.S. government, this program alone has the strong potential provide Energy Fuels and perhaps a couple of other companies with a nice baseline of production and revenue, enabling us to save jobs and uranium production capacity. The alternative is to become massively dependent on Russian uranium and nuclear fuel, which nobody in the U.S. wants to see.

There’s still more work to do – in particular, how to implement this program to ensure its success. However, we believe yesterday’s announcement was a huge step in the right direction.”

Western Uranium & Vanadium Corp.’s (CSE: WUC | OTCQX: WSTRF) Founder and CEO George Glasier commented: “We are very pleased that President Trump provided for a national uranium reserve and acknowledged that the domestic production of uranium is a national security issue in his Fiscal Year 2021 – A Budget for America’s Future. The multi-year efforts of the President, Nuclear Fuel Working Group, and Department of Commerce were ground-breaking for addressing domestic critical and strategic mineral requirements and initializing the rebuilding of America’s nuclear fuel cycle. We look forward to the release of additional recommendations from the Nuclear Fuel Working Group report. In the short-term supporting domestic mining will reinvigorate hardworking mining communities, but in the end the result will be the advancement of national defense, nuclear infrastructure, and energy independence goals.”

Closing comments

The budget document is a positive response by the Trump administration to the NFWG’s recommendations to support the domestic uranium industry. At this stage it is still too early to know any details on terms – what price will the uranium be bought etc., we will provide updates as we secure them.




Investors showing quiet confidence that Trump’s working group recommendations will see a revival of the US domestic uranium industry

The uranium Section 232 discussion continues. President Trump recently created the U.S. Nuclear Fuel Working Group (Working Group) to develop recommendations for reviving and expanding domestic nuclear fuel supply and production, following on from industry demands in Section 232 Petition. Remember 20% of US energy comes from nuclear plants, yet the US has almost no uranium production. The U.S. Department of Commerce Section 232 Report on uranium will soon be made public.

According to Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), the Working Group being set up shows that President Trump clearly recognizes that the decline of domestic nuclear fuel production is a U.S. national security issue. The Working Group has been mandated to determine what to do about the issues raised in Proposition 232 (now Section 232 Petition) and they have until mid-October 2019 to provide recommendations to the President.

A brief reminder of Section 232 Petition

Section 232 Petition initiated by Energy Fuels looked at a 25% domestic (US) production quota for uranium, for national security reasons. The Petition highlighted industry concerns that cheap uranium is being dumped onto the US market. US uranium miners have to compete with state-subsidized mines in Russia and its allies in Kazakhstan. This means US uranium miners are operating at a loss or at best break-even levels.

It is understood that the US Commerce Department and other U.S. government agencies now recognize that Russia, China and their allies are working to control the global nuclear fuel market and marginalize the U.S. This also represents a national security threat as the U.S. needs domestically sourced uranium for defense purposes and general nuclear energy production.

The US Nuclear Fuel Working Group

With all this information, the current administration is taking a more holistic look at nuclear fuel production under the name of the U.S. Nuclear Fuel Working Group. This includes uranium mining, milling, conversion and enrichment. Remedies like quotas could still be on the table, but the creation of the Working Group opens up other ways to support the domestic industry including direct support, support to U.S. utilities for buying U.S. uranium products, tax breaks, regulatory reform, and other similar actions.

Insider buying by Energy Fuels management

Energy Fuels is very optimistic that something positive will come from this for the U.S. uranium mining and milling industry. This optimism extends to senior management of Energy Fuels who continue insider buying of company stock. On August 7, 2019 CEO Mark Chalmers bought 12,398 shares and on that same date, COO Paul Goranson bought 11,900 shares.

Energy Fuels Inc.

Energy Fuels Inc. is the US number 1 producer of uranium and vanadium.  The Company’s White Mesa Mill boasts a licensed capacity of over 8 million pounds of U3O8 per year that provides Energy Fuels with significant production scalability.

Energy Fuels stands to be a significant beneficiary if there are positive recommendations from the U.S. Nuclear Fuel Working Group. In particular, should a dual uranium pricing mechanism be adopted or US producers subsidized, then this will put Energy Fuels in an enviable position having the only operating conventional uranium mill in the U.S.

Recent Energy Fuels insider buying of their stock suggests management are quietly confident that Trump’s working group recommendations will see a revival of the US domestic uranium industry.




The US uranium industry holds its breath over the result of Proposition 232

The US is currently very dependent on Russia (38.3%), Netherlands (25.9%), Germany (16.5%), UK (14.5%), and China (3.5%) for enriched uranium imports. Decades ago the U.S. dominated nuclear energy exports. Right now the US is facing stiff competition mostly Russian backed Kazakhstan. This is a worry for the Trump administration as the US share of the global uranium market was once quite high but has now fallen to ~<2%. Washington believes cooperation in the nuclear realm is central to its strategic relationships; however winning energy contracts isn’t easy as both China and Russia are aggressively pursuing those deals often with the help of state subsidies. The majority of the huge global nuclear power deals being made are with Russian and Chinese and other state-owned corporations. This is at a time when the US hasn’t been enriching uranium as they struggle to develop uranium mines at home.

Russia’s stranglehold on processing is exacerbated by their underfeeding capacity. Of the latest data available, Russia produced 38.3% of the enriched uranium but only mined 4.9%. To add to this the enriched product for Kazakhstan and Uzbekistan was collectively 17% but are working under depreciated currencies and very little if any environmental regulations. Russia has a relatively large uranium resource, but it is deriving most of its feed stock from Uzbekistan and Kazakhstan. Russia is the last step in the process and has the ability to cut off the U.S should any issue arise.

China is also building up ties with Russia and uranium supply

In a three day state visit to Russia last week, Chinese President Xi Jinping and Russian counterpart Vladimir Putin agreed to upgrade bilateral relations during 70 year celebrations on diplomatic ties. Russia and China believe they have no choice but to cooperate to make their economies more independent from the West. Both are in an economic war with the U.S. It is becoming apparent that both countries are securing future uranium needs. As China expands its nuclear energy capacity it continues to purchase uranium mines, many of which are located in Africa.

U.S. uranium concentrate production (1949-2017)

20% of US energy comes from nuclear plants yet the US has almost no uranium production

The US is the world’s largest producer of nuclear power with 30% of global nuclear electricity generation and needs to secure its nuclear fuel cycle for its 98 nuclear reactors. In fact, 20% of all US energy comes from nuclear plants making it a key source of US energy supply.

In 2019, it is expected US uranium supply will not even be enough to supply one reactor, leaving no uranium supply for defense purposes. As mentioned above unfair competition from state owned enterprises is currently disrupting uranium market pricing, hence the need for Proposition 232 (Section 232 petition).

Section 232 petition

Section 232 petition is key legislation that is considering requiring the US Government to set a quota to limit imports of uranium into the U.S., thereby reserving 25% of the U.S. nuclear market for U.S. uranium production.

The US nuclear industry is holding its breath waiting for the decision on Section 232 petition. A positive reply from the US President could be the ignition to re-ignite the US’s uranium industry in securing its future nuclear powered electricity needs. All the industry is asking for is a level playing field to compete with the subsidized state owned producers of Russia and China. We await a decision on or before 13 July, 2019.

Western Uranium & Vanadium Corp. (CSE: WUC | OTCQX: WSTRF) has seven past producing uranium mines that could go back online at minimal cost. They are currently not in production due to weak spot uranium prices; however the Sunday Mine and Saint Jude Mine are set to open this month (June 2019). Investors can read more in my recent update here.

The Company has four main properties, which are estimated to contain a total resource of 70 million pounds of uranium. In addition, three of the four properties contain 35 million aggregate pounds of vanadium, grading between 1.4-2%. In December 2015, the Company entered into a uranium concentrates supply agreement with a top 3 U.S. energy utility for uranium delivery commencing in 2018. If Section 232 petition succeeds, Western Uranium & Vanadium would be a key potential new supplier of uranium for the US market.