Balancing exploration and project development key for Fission at PLS

TORONTO (miningweekly.com) – Exploration superstar Fission Uranium is gearing up for a C$13.3-million summer campaign at its flagship Patterson Lake South (PLS) project in the relatively underexplored Western Athabasca basin, in northern Saskatchewan, and is looking to balance its exploration activities with the objective of moving the Triple R deposit to the prefeasibility (PFS) stage.

According to Fission chairperson and CEO Dev Randhawa, exploration at PLS had always been based on finding creative ways to explore the property, “while not blowing our brains out”.

“We are cautiously moving ahead with exploration while also moving towards PFS, in which Chinese offtake partner CGN is interested,” he told Mining Weekly Online in a telephonic interview from the company headquarters in Kelowna, British Columbia.

LOW HANGING FRUIT
Randhawa explained that PLS represented one of the last remaining “low-hanging fruit” in the uranium-rich Athabasca Basin, representing high uranium grades at shallow depths from surface. The other comparable mines, such as Cluff Lake, Key Lake and McLean Lake, had already been mined out.

“While we are still looking at PLS as an exploration project, we are also ramping up expenditures this year as we move the project up the development curve, he said.

Fission in December announced an C$82-million deal with China’s largest nuclear builder, CGN, which took a 19.9% stake in the company. With the new Chinese directors now settled in on the Fission board, Randhawa explained that all of Fission’s exploration decisions were based on shareholder feedback, including CGN’s strategic insights.

“They know a lot more about the uranium market than we do. We do not make decisions in a vacuum – we listen to our shareholders,” he advised, explaining the valuable insight CGN brought to the table.

CGN currently had 19 operating reactors and a further 23 new reactors in the construction phase. The company would buy 20% of PLS’s yearly uranium output and held an option to buy a further 15% at industry standard terms.

Randhawa said it was a balancing act to move the development project towards the PFS stage while also looking for new major discoveries on the PLS property. “We need to get ready to hand the project over to development management at some point,” he said.

According to Randhawa, people in the uranium industry rarely understood that not all uranium pounds were made equal. “They don’t get that a grade of 0.1 ppm uranium at 500 m below surface in unstable Athabasca conditions is not the same as our project,” he said.

He pointed to Cameco having suspended underground mining operations at its Eagle Point mine, owing to a rock fall in December, and Cameco’s frequent and expensive flooding problems during the construction of Cigar Lake to illustrate the frustration of mining underground in the Athabasca basin. “One cannot trust water 500 m underground,” Randhawa noted.

WAITING GAME
However, the big question was: When would the uranium price come back? According to Randhawa, the Fukushima disaster in Japan had disrupted the uranium buying cycle, causing spot prices to fall. It had been creeping sideways around the $30/lb mark for most of this year.

“For that reason we are planning our business by expecting the worst, while hoping for price improvement. It could be three months or it could be three years. There is a great demand for uranium, we don’t know exactly just when it will start again,” he stated.

He also pointed to California having announced on Tuesday that it would shut down its two-reactor nuclear programme by 2025, betting that renewables would be more affordable at that stage. However, Randhawa pointed out that two plants in California represented a drop in the ocean compared with the proposed 202 reactors expected to be built in China by 2030, while global electricity demand was expected to grow 76% by that time.

Randhawa said the company was well funded for three years to conduct exploration and finish the PFS and, should it be required, could slow things down and continue its work for five years without additional financing.

He noted that the company had been offered plenty of attractive financing opportunities for its PLS project, but refused it in favour of riding out the market doldrums. “We are aware of the market but are not pursuing development at all costs. There still is blue sky exploration potential at our project and we’d like to make all of the major discoveries before we later possibly sell it on to a bigger player,” Randhawa advised.

BLUE SKY POTENTIAL
Meanwhile, Fission president, COO and director Ross McElroy highlighted the sheer exploration upside at PLS, with Triple R representing only one small piece out of about 105 identified conductors on the property to date.

While the preliminary economic assessment showed Triple R could be a standalone project, current work simultaneously focused on baseline environmental monitoring and growing the existing mineralised trend with the aim of connecting the lateral deposits. Fission’s drilling campaign this past winter had discovered new deposits to the west and east of Triple R, with the strong possibility that they could all be connected.

"This summer programme follows the tremendous success of our winter drilling, which opened up new areas of shallow, high-grade mineralisation and delivered the largest mineralised trend in the Athabasca basin region – a trend that is still wide open.

“This new programme will focus on aggressive growth of our high-grade zones to the east and west of the 2.58 km trend, together with a large number of key regional targets. We will also be testing between our mineralised zones to evaluate the potential of connecting them,” McElroy stated.

He explained that Fission was the only company in the Athabasca basin to use reverse circulation (RRC) rigs for exploration. According to him, Fission used RC rigs to pre-collar holes in the overburden, as it was cheaper and more efficient. This was followed up with diamond core rigs, which helped fast-track exploration while saving costs. One of the most significant discoveries made so far using the technique was the step-out R840W zone.

The company planned to drill 15 200 m to both expand existing zones and test other targets. The programme, which was expected to get under way mid-July, would include geotechnical and metallurgical work in preparation for the PFS.

A summary of the planned work included 36 holes along the 2.58 km mineralised trend to connect new zones to the Triple R deposit; 16 holes at key regional targets; a 32 line kilometre moving loop electromagnetic survey to identify additional drilling targets along the Paterson Lake Corridor; a 138 line kilometre two-dimensional marine seismic survey to identify areas of stronger, wider mineralisation, and to generate data for geotechnical engineering; and other prefeasibility activities comprising geotechnical borehole testing, hydrogeological monitoring wells and metallurgical studies.