Fission wants to split uranium project costs with a partner in Saskatchewan

Fission Uranium (TSX:FCU; OTCQX: FCUUF) plans to fund the $1.5-billion Patterson Lake South project in northern Saskatchewan mostly with debt but it’s considering taking on a partner to help pay for it.

The financing structure could be 70%:30% debt to equity, while sharing the cost of a $350-million mill with other developers in the western Athabasca region would cut costs, Fission CEO Ross McElroy told an online conference hosted by Toronto-based Bloor St. Capital on Friday.

“We would maybe consider bringing in a strategic partner to help, somebody with possibly mining experience, somebody to help with financing,” McElroy said. “There’s a possibility for some sort of sales opportunities with contracts with utilities, and I’m not talking about locking in prices. We obviously want to be able to take advantage of higher uranium prices.”

The price of the commodity doubled in the last year to US$106 per lb. on Friday. Fission is aiming for a 2029 production start at the project, which has an after-tax net present value of $1.2 billion at an 8% discount rate for an internal rate of return of 27%, according to a feasibility study released early last year. All-in sustaining costs are pegged at US$14 per lb., McElroy said.

The 310.4-sq.-km site’s Triple R deposit contains probable reserves of 3 million tonnes of uranium grading 1.41% uranium oxide (U₃O₈) for 93.7 million lb. of contained metal.

Permits

The federal regulator should complete its review of the project by mid next year, the CEO said. The company is advancing provincial applications to submit next month, he said. This week, Fission is starting 6,000 metres of drilling in a winter program that resumes exploration on the property for the first time since 2017.

“We’re going to focus at this point right along the Patterson Lake corridor where we have our Triple R deposit, retesting targets that are both along strike off the electromagnetic conductor,” McElroy said. “We think there’s potential for finding more occurrences of high-grade uranium along that trend.”

Patterson Lake isn’t the only advanced uranium development project in the southwest Athabasca Basin, far from existing infrastructure in the east. The CEO again mentioned the prospect of synergies with NexGen Energy’s (TSX: NXE; NYSE: NXE; ASX: NXG) nearby advanced Rook I project. NexGen won provincial approval in November for its plan to build a mine and mill.

“There are definitely opportunities to have a central mill in the area and that would benefit NexGen, that would benefit Fission, it would also benefit other projects nearby,” he said.

“If you can have a larger central mill, you really have the potential to substantially reduce capex and really be able to have far superior economics even with what we’ve already outlined. It’s certainly an avenue we’re going to investigate.”