Fission Uranium sees $7 billion Saskatchewan mine

Fission Uranium Corp (TSE:FCU) shares opened more than 6% higher in brisk trading on Thursday after the explorer and developer released a much-anticipated study on its giant uranium discovery in the Athabasca Basin, Saskatchewan.

Fission's preliminary economic assessment for its wholly-owned high-grade Triple R deposit at its Patterson Lake South property envisages a open pit–underground mine for an estimated capital outlay of $1.1 billion producing more than 100 million pounds of yellowcake over 14 years.

Fission estimates the hybrid approach utilizing a dyke system will result in operating expenditure of $14.02 per pound U3O8 over the life of mine, making Triple R potentially one of the lowest cost uranium producers in the world.

Spot uranium prices – usually much lower than long-term contract pricing which is the norm in the industry – were last assessed at $36.70. Fission's PEA assumes a long term price of $65 a pound for gross revenues over the life of the mine of $7.7 billion and net revenues of $7.1 billion after provincial royalties and transportation charges.

The $294 million company based in Kelowna, BC in July announced a proposed merger with Denision Mines to combine the richest uranium properties in the region on par with with the high-grade unconformity giants McArthur River, Cigar Lake and Phoenix.

Highlights of the PEA for Fission's wholly-owned Triple-R project include:

  • Base case pre-tax Net Present Value ("NPV") of $1.81 billion, post-tax NPV of $1.02 billion (10% discount rate)
  • Mine life of 14 years producing an estimated 100.8 million pounds of yellowcake at a metallurgical recovery of 95%with 77.5 million pounds of U3O8 recovered in the first 6 years of production
  • Average annual production of 7.2 million lbs U3O8 over the life of mine
  • Base case pre-tax Net Cash Flow over the proposed mine life of $4.12 billion, post-tax Net Cash Flow of $2.53 billion
  • Base case pre-tax Internal Rate of Return ("IRR") of 46.7%, post-tax IRR of 34.2%
  • Pay back estimated at 1.4 years (pre-tax), pay back at 1.7 year (post-tax)
  • Estimated initial capital costs ("CAPEX") of $1.1 billion
  • Average operating costs ("OPEX") of US$14.02/lb U3O8 over the life of mine