Fission’s McElroy discusses 2014 progress at PLS

VANCOUVER — Explorer Fission Uranium (TSX: FCU; US-OTC: FCUUF) has been one of the few juniors that has kept a steady drilling rate over the past two years despite tough capital markets. The company’s Patterson Lake South (PLS) uranium discovery just outside Saskatchewan’s Athabasca basin has grown, and president and chief operating officer Ross McElroy sat down with The Northern Miner to discuss Fission’s progress and an eagerly awaited maiden resource estimate, expected by year-end.

The company started the year with a 35,200-metre drill program designed to merge four mineralized zones into one. Fission completed 92 core holes, comprising 80 delineation holes on the main mineralized trend and 12 holes aimed at regional exploration.

“During the winter we took a number of unique zones we discovered in 2013 and really tried to glue them together to make one long body of mineralization … [mid-year] was all about filling out the width dimensions,” McElroy says.

Fission followed up with a 20,300-metre mid-year program. Drilling unearthed Fission’s crown jewel at PLS: the R780E zone. The company merged five uranium zones into a single 930-metre long zone that extends 150 metres in  width.

“It’s turned out to be wider than most deposits, and the grade’s been pretty consistent all the way through. What I think you see right down the guts of the deposit is a high-grade spine, but the key components remain the same. We’re still near surface and you have great continuity from section to section,” he adds.

McElroy says R780E is a “remarkable zone” due to the company’s success rate at the target. Fission hit only six “blank holes” during its 2014 drill programs, with only one of those holes collared at R780E.

The company reported a 100% success rate during mid-year drilling at the target, with continuous grade consistency. Key intervals reported in 2014 from R780E include: 24 metres of 8.5% uranium oxide (U3O8) from 78 metres deep in hole 14-271; 48 metres grading 13.2% U3O8 from 130 metres deep in hole 14-248; and 38.5 metres averaging 4.2% U3O8 from 132 metres deep in hole 14-259.

“One of the important takeaways is that it’s basement-hosted deposit, which is the favourable rock regime in the Athabasca, even more so than the unconformity,” McElroy continues. “It’s lower down so you have more competent rock on either side. If you’re a mining engineer, you’d definitely rather have a deposit in the basement rock.”

Fission’s upcoming resource estimate will incorporate the R780E and R00E zones, which could offer intriguing mining scenarios, since they run near to surface and thus boast open-pit potential.

Fission is likely aiming for a resource in the ballpark of Denison Mines’ (TSX: DML; NYSE-MKT: DNN) unconformity-type Phoenix deposit — along the eastern flank of the Athabasca basin — on the Wheeler River joint venture. In June Denison announced Phoenix hosts 166,400 indicated tonnes grading 19.1% U3O8 for 70.2 million contained lb. U3O8. Fission would likely see lower grades at PLS, but Phoenix lies 400 metres below surface.

Raymond James analyst David Sadowski has a contained metal target of 100 million lb. U3O8 at PLS, though he notes that “we see potential for 150 million lb. in the longer-term.”

“When you look at Athabasca deposits you have your outliers like Cigar Lake and McArthur River. Then you’ve got Phoenix, which is similar, but really a fraction of the size,” McElroy says. “The shallower you are the lower the grade tends to be. For us we’re definitely looking at an affordable mining scenario due to our depth. We believe we have size and relative grade going for us as well.”

The next evolution at PLS will involve Fission chasing viable targets across the greater property package. So far the company has focused its drill campaigns on resource delineation, but it looks like an upcoming program in early 2015 will see the drill bits turn outward. McElroy explains that the company has a 20,000-metre program in mind with a US$10-million budget, and half of that is earmarked for property-wide exploration.

It’s notable that the main PLS zone occurs in a single electromagnetic (EM) conductor, while Fission’s 310 sq. km property package hosts 105 similar EM occurrences. In January the company initiated a US$500,000 radon survey that targeted 10 such conductors within four outlined areas of the PLS property.

“The next conductive zone down, moving south from PLS, is called Far East. It’s one of a series of conductors we drilled [mid-year] and hit radioactivity in three of five holes. Again, it’s telling us there’s smoke there,” McElroy says. “We also did some more property-scale radon surveying, and we’re seeing anomalies in all those surveys. Our Forest Lake target has results similar to Patterson Lake, and it’s also where the geophysics look the most promising.”

Fission has the capital to continue drilling through the New Year, as the company closed a $12.5-million bought private placement in late August. The offering included 8.4 million flow-through shares priced at $1.50 per share.

Fission has traded within a 52-week window of 65¢ to $1.73, and closed at 91¢ per share at press time. The company has 363 million shares outstanding for a $330.4-million market capitalization.

“We’ve been aggressive with our exploration, even in weaker markets,” McElroy says. “We’re more results driven and we’ve done a whole lot of exploration and development in a terrible uranium market — and it has still paid dividends. Our shareholders have benefited from discovery, and not from waiting for the right timing.”