VANCOUVER — Here’s hoping Fission 3.0 (TSXV: FUU; US-OTC: FISOF) is a chip off the old block when it comes to uranium exploration success stories.
Fission 3.0 was spun-out of Fission Uranium (TSXV: FCU; US-OTC: FCUUF) last December, when the latter acquired joint-venture partner Alpha Exploration (TSXV: AEX; US-OTC: ALPXF) for $185 million in order to obtain sole ownership of the exciting Patterson Lake South (PLS) uranium discovery just outside the southwestern margin of Saskatchewan’s uranium-rich Athabasca basin. (Fission Uranium was itself spun out of Fission Energy, which was acquired by Denison Mines following a discovery, hence the “3.0”.)
While PLS was kept in Fission Uranium, less-valuable assets were placed into Fission 3.0: prospects in northern Saskatchewan, including the Patterson Lake North (PLN), Clearwater West, North Shore, Beaver River and Manitou Falls properties; the Macusani uranium prospect in Peru; Fission’s proprietary airborne geophysical technology; and $3 million in cash. Fission 3.0 shares the same management team now running Fission Uranium.
Fission 3.0 prefers joint ventures, wherein it options 50% of a prospective Athabasca project to another junior with investment capital to fund early stage exploration Fission 3.0 remains project operator, however, so that it can leverage its technical staff and in-house airborne geophysical surveying technology.
This strategy is exactly what Fission 3.0 is doing at its early stage PLN and Clearwater West projects.
The company optioned 50% of PLN to Azincourt Uranium (TSXV: AAZ; US-OTC: AZURF) — which is run by Cameco alumni Ted O’Connor — in April 2013 in a deal that requires Azincourt to spend $12 million in staged exploration and pay $4.8 million in cash.
Azincourt is scheduled to earn a 10% interest in the project in the agreement’s first two years by spending $4.5 million on exploration and paying $1.3 million in cash.
The companies started drilling at PLN earlier this year to test the A1, A1B and A3 basement electromagnetic (EM) conductors in the project’s Harrison Lake area.
According to Fission 3.0 chief operating officer Ross McElroy, PLN is a more “traditional Athabasca-type project,” where his team is working through sandstone cover to identify two uranium mineralization styles.
The first is an unconformity hosted deposit at the base of the Athabasca sandstone and the basement, and the second is a PLS-style basement-hosted deposit that’s structurally controlled.
“We’ve started with testing a few conductors down on the southwest part of the project area. So far we’ve encountered the geology we’re looking for, with the right basement rocks that are graphitic, and there are sulphides in there,” McElroy says during an interview.
“It’s really what you’re hoping to find on first-pass drilling. The corridors are real, your geophysics is confirmed and you have a path forward,” he says. “Ted’s an experienced Athabasca geologist and [they were] quick to see the results as positive and move onto working towards year two, which will definitely have a greater emphasis on drilling.”
After the first drill program at PLN, Azincourt accelerated its earn-in in April and committed another $3 million in exploration over the next year.
McElroy’s exploration plan hinges on three areas. First, he wants to test A1 — the “main conductor” — farther north, as the “best holes” from the maiden program lay along the northern edge of drilling towards the central part of A1. Second, Fission 3.0 will target conductors in PLN’s eastern regions around Hodge Lake. The third area involves more geophysics on the N conductors, which sit in north PLN and were discovered in late 2013.
“We did some radon work on the A conductors, and it was compelling,” McElroy says. “We’re starting to see some interesting anomalies associated with the conductor itself. It’s not necessarily a target mechanism for drilling, but it does tell you that the conductor has uranium fluid moving into it, and that’s a key part, since it’s one way to see if you want to waste time drilling a specific target. At this point the radon is supportive, but the geophysics has been the base of the targeting.”
Fission 3.0 struck an option agreement on its Clearwater West project in February with junior Brades Resource (TSXV: BRA). Fission 3.0 chairman and CEO Dev Randhawa says he had a prior relationship with Brades director Brian Biles, and felt there was little risk associated with the deal, since Clearwater was a greenfield project where Fission had yet to spend significant exploration dollars.
Clearwater covers three contiguous claims over 118 sq. km directly south of PLS. Brades must spend $5 million on exploration over three years to earn 50% in the project, with capital obligations during year one totalling $700,000. The companies started work at Clearwater in early 2014 with Fission’s patent-pending radiometric airborne survey technology.
The wide survey reportedly uncovered a cluster of radiometric anomalies on the eastern 10 km of the property, where historic data identified north–east trending EM conductors. The anomalies will be followed up with ground prospecting in mid-year.
“We identified a number of anomalies that could be uranium boulders and/or outcrop,” McElroy says. “They have an interesting pattern and they’re clustered near conductors. There is a particularly strong trend of conductors on the east side that are a continuation of conductors we have at PLS. It’s adjacent to one of the best uranium discoveries out there, and we’re seeing good radiometrics along strong conductors with the right magnetic signature. It has a lot going for it, especially for such a grassroots asset.”
In March Fission 3.0 expanded its Athabasca portfolio when it staked three projects totalling 419 sq. km. Fission 3.0 staked its 208 sq. km Perron Lake property in northern part of the basin along the Grease River shear zone, where anomalous outcrop sampling at the Bradley occurrence in 2007 returned up to 3.5% uranium oxide (U3O8) as pitchblende veins in a 3-metre-wide shear.
The company tacked on 92 sq. km at its Cree Bay project and extended its Manitou Falls asset by 76 sq. km. Both are located in the northeastern Athabasca.
McElroy says all the company’s staking initiatives are “shallow.” Fission 3.0 is hoping to emulate the success at PLS, which is within 450 metres of surface and carries relatively low exploration costs compared to deeper uranium deposits throughout the region.
“Those depths are what I call the ‘sweet spot’ of exploration. The geophysical picture is clearer, and the exploration costs are lower. We know there is deep uranium mineralization, but those are prohibitively expensive for a junior to explore. All these properties we’ve staked around the edge of the basin follow that template, and will allow us to use the techniques our team has found to be successful over the past four years,” he says.
Fission 3.0 has been struck by an industry wide decline in uranium stocks to start the year. The company closed at a 52-week low of 8¢ per share at press time on 3.2 million shares traded. Fission 3.0 has 154 million shares outstanding for a $15.4-million market capitalization.
“So much of it is out of our control, with the biggest recent issue being the uranium price collapse,” Randhawa says, pointing to the recent drop from US$35 per lb. U3O8 to US$29 per lb. U3O8.
“We were fortunate to raise money last year at a much higher share price, so we have the capital to move forward. I don’t think it says anything about our projects, and we’re definitely not alone amongst uranium stocks trending downward.”
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